Health Care is Not a Demand-Side Problem

Health Care is Not a Demand-Side Problem

The cost of healthcare is a supply-side problem.

Considerable time is being spent arguing costs are entirely demand driven. It is not! This argument is nothing but part of a scheme to rig the market to limit supply to support the costs (the profit margin). It is a pro-profit argument, like Reaganomocs, not pro-growth.

Yes, demand is strong and relatively inelastic. In other words, one unit increase in price does not result in a decrease in demand. Everybody needs health care. This is the perfect condition for abusive pricing and fraudulent practices that comes with minimizing market forces and maximizing public finance. It is also a strategic market for taxing the value added and reinvesment by means of public finance to increase the supply to meet the demand, thereby controlling the costs.

The sector charges largely whatever it wants and the government pays it. There is currently some control, but it is very weak because of the revolving door and requires a huge government bureaucracy, adding to the cost. They know that if the government does not pay it, the cost will be dramatically reduced because if no one can afford you, and you do not lower your prices, you do less business, and your income is dramatically reduced.

More focus needs to be placed on supply-side measures--all the things health care professionals and entrepreneurs do not want to talk about or dismiss as either unprofessional or detrimental to quality, like market forces--a competitive multiplicity in the marketplace. The arguments against market forces here are the same used during the robber-barron era of economic trusts: market competition is wasteful, crude, unsophisticated and diminishes quality and innovation--all of which is just a lot of self-interested nonsense being sold as the general welfare.

Economic pluralism is what the health care industry does not want and has the money (the value added) to prevent. The focus is on demand, and if your lifestyle does not meet the prescribed measure of health, you are not being sufficiently taxed to cover the cost. This could not be more tyrannical!

The jig is up!

If you want to control health care costs, here is how you do it.

The first step is to tax the value-added for reinvestment in growth (supply) rather than consolidation. The value added (the profit margin) is a market solution that a consolidation of capital tends to not allow. Investment in the added value as a measure of what we want and need, like healthcare and energy, is what gives free markets the force of cost-effectivness, efficiency, and legitimacy. It is the role of government to be sure it is fully operational.

The Treasury has a leading role for strategic, supply-side reinvestments. The legislature identifies the value-added markets and enables it through the Treasury. The Federal Reserve, our nation's prime lender, reacts to the disinflationary effects of added supply, rather than the deflationary effects of consolidating the added value. The result is a pro-growth, downward pressure on rates. Instead of encouraging inflation, like we have now, the Fed is encouraging growth, adding to the supply side.

Government is just as easily opeationalized to ensure affordable market solutions as it is to limit it.

The general-case solution statement of maximizing market mechanics will result in higher incomes and lower costs. This is the formula for making health care more affordable. It has nothing to do with diminished professional standards, quality, or any particular lifestyle. If that bag of potato chips does not kill you, something else will.

It is not because you are too fat, or because you smoke too much, or you drive an air polluting car.... Health care costs are so high because the market is rigged to maximize demand and the taxes to support it, and minimize supply so that costs are projected to be a $5 trillion expense by 2011.

Controlling the costs of health care is entirely possible, and instead of being an economic detriment, it is the demand for growth that drives a healthy economy.

Copyright 2008 by Griffith Lighton