Tuesday, September 25, 2012

Affordable Food Care Act

Now that the Affordable Healthcare Act (aka "Obamacare") has been declared constitutional by the US Supreme Court, and has gone into effect, it is high time we move into the even more important realm of FOOD CARE.

After all, most of us EAT three times a day (some five times or more) while most of us only require health care a few times a year. If we are deprived of health care, most of us will live on for years, but, if we are deprived of food, even the strongest of us we will survive for only days (or three weeks max).

Having established that FOOD CARE is more critical than Healthcare, let us come up with a solution that will reduce costs and improve quality. Let us take the unfair profits away from the blood-sucking supermarkets by establishing a single-payer food program that will assure the healthiest foods at the lowest possible cost to us and our fellow citizens (and legal and illegal aliens as well, of course).

For example, there are dozens of supermarkets in my Zip Code, all of them profit-based and all making fat profits selling food that is often unhealthy and that has made many of my neighbors sickly and obese. Each of these supermarkets is earning exorbitant profits by jacking up their prices to the highest levels possible. Why should there be more than one food supplier in any given Zip Code? Why should we, the consumers, have to pay the bloated overhead of all these duplicated stores?

THE FOOD CARE SOLUTION

The advent of email, and unfair competition from profit-making UPS and FedEx, has nearly destroyed the United States Post Office. Most of their buildings are underutilized and they require large subsidies to continue operation and pay their employees.

The FOOD CARE solution is OBVIOUS. Turn FOOD distribution over to the real delivery experts at the US Post Office and FOOD acquisition over to the real nutrition experts at the US Agriculture Department. Make fresh, healthy food available for free, delivered seven days a week directly to every home in America. Letter Carriers will once again have full mailbags. Since they already deliver mail six days a week, adding a seventh day will not raise costs by more than 15%.  By eliminating profits, costs will go down, and by eliminating unhealthy foods, there will be large savings in the public health care system.

Everyone will be required to purchase Food Care Insurance and those who refuse to do so will be charged a $500 tax per year (but only if they can afford it). In that way:

- Everyone in our great country will be assured three square meals a day!

- Fresh food will be delivered daily, eliminating the cost of weekly trips to the supermarket and the expense of household refrigerators and freezers as well as the Global Warming imposed by the energy demands imposed by unnecessary travel and household appliances.

- And disabilities due to unhealthy, fattening and sugar-filled foods will be a thing of the past!

- And health-care costs will go down as life-expectancy goes way up!

- And, the US Post Office, a cherished memory of government services at their best, will survive and prosper!

What could possibly be wrong with this plan?

Ira Glickstein

UPDATE 27 Sep 2012 
 
Howard Pattee posted a comment on 26 Sep regarding US Health Care costs, and why they are so much higher than other countries. I did some research on why US health care costs have risen so fast and concluded that about half the increase is due to medical technology advances that were not available in the past and that are both increasing lifetimes and are very expensive.

However, it appears (see chart below) that the other half of the rapid increase in costs is driven by government programs where a third-party (US Taxpayer) is paying and the consumer gets the care for "free" so they have no reason to shop around or limit their consumption and, as a result, suppliers have no incentive to contain costs. This almost completely eliminates normal market forces that balance supply and demand according to cost and affordability.

My (sarcastic) example of "free" food supplied by the government was meant to show how ridiculous it would be to remove market forces that improve quality and convenience and keep costs affordable.  Milton Freedman said that if the government was put in charge of the Sahara Desert, within six years there would be a shortage of sand! And the cost of sand would skyrocket as the quality declined.

In other countries, notably the UK, medical costs are contained by rationing care based on a limit of about $40,000 per additional Quality-Adjusted Life Year (QALY). If a given procedure would increase the lifetime and quality of life of the recipient, but exceeds the cost limit per QALY, an alternate, less expensive procedure, such as palliative care, will be provided.

For the record, I wrote about the QALY concept way back in 2009 see http://tvpclub.blogspot.com/2009/09/end-of-life-honest-brokers-not-death.html and I support it for public medical expenditures in the US.

(More recently, see http://tvpclub.blogspot.com/2011/02/runaway-trolley-applied-to-end-of-life.html, and http://tvpclub.blogspot.com/2012/08/quality-of-life-and-health-related.html for my views. Unless we thoughtfully address End of Life and rationing of health care for people with chronic and terminal conditions, we will never be able to control overspending on health care. A false sense of "compassion" and "fairness" and "caring" will continue to bankrupt the USA.)

17 comments:

Anonymous said...

Do you expect to get your food at your village post office box?

Howard Pattee said...

The USPS was declared number one for efficiency among the Group of Twenty major global economies, according to findings from England's Oxford Strategic Consulting. The U.S. Postal Service scored the highest for efficiency, even as it delivers far more letters per employee -- 268,894 in 2010 -- than other services in the G20. Japan Post, which came in second, delivers 103,149 letters per employee, and Australia Post, which placed third, delivers 166,776.
But delivering letters is not the way of the future, according to Scott Jackson, author of the study and visiting professor of management psychology at Oxford University. "But unfortunately, it's very efficient on the sort of the thing that's going to be the least important in the future: delivering letters."
Source: http://money.cnn.com/2012/02/06/news/economy/postal_service/index.htm
(Siberian post offices sometimes sell groceries because there are no other grocery stores available.)

American health care is the least efficient of any of worlds developed countries.”The least efficient payers in the world are the American private insurance companies. They have administrative costs of 20 to 30%. That's a 30% tax on every dollar you spend on health care. Britain is totally socialized medicine [and its] administrative costs [are] 5%. Canada is private doctors and public payers - 6% administrative costs. So it turns out, for some reason in health care, governments are doing this more efficiently than our private sector."
Source: T. D. Reid The Healing of America.

Ira Glickstein said...

THANKS Howard for returning to the pages of this Blog!

In response to your comments, I have added a graphic at the end of my main posting showing how well-meaning government programs that eliminated normal market forces from the medical arena are responsible for half the rapid increase in US medical costs. (The other half is due to advances in medical technology that are effective in extending life, but are very expensive.)

Please have a look at my graphic and text and comment further. As you know, I value your opinions!

As for the efficiency of the USPS, I think the success of UPS and FedEx in eating the USPS's lunch, and making a profit at it (and paying taxes while the USPS needs a subsidy), speaks more clearly than comparisons to other countries.

The number of letters per employee is an interesting metric, but it is probably misleading when comparison is made to other countries where the "Post Office" does much more than deliver letters. So, for these countries, many "Post" employees have nothing to do with delivering letters.

As you note, however efficient the USPS may be at delivering letters, that is a declining market due to email, which is why we US Taxpayers are subsidizing the USPS. And it will only get worse in the future.

If a profit-based enterprise such as UPS or FedEx couldn't pay their bills, they would either expand into other markets, or shut down stores and package processing facilities to restore their return on investment. You may recall DHL and Airborne Express failed in their competition with UPS and FexEx (and the USPS :^) and went out of business. A great example of the creative destruction of market forces that keeps quality up and costs down.

The USPS should close all local Post Offices that lose money, and replace them with mobile offices that come a couple times a week. Six days a week delivery makes no sense compared to instant email, so those should be cut back to twice a week.

Of course, people in small towns would complain to their Congressmen and derail any such plan. Thus, the fact that the USPS is a government enterprise, subject to political pressures unrelated to normal market forces, is why they are losing money.

It is dangerous to turn markets -particularly those that are critical to our economy- over to the government and make them subject to political manipulation and free from normal control by the consumer via market forces.

Ira Glickstein

Howard Pattee said...

Ira is confusing health care costs with efficiency as measured by the quality of health care (a complex measure involving many variables) vs. total cost of health care (including public, private, and personal resources). Health care costs are a big problem worldwide for many reasons; the dominant ones are technology and demographics. (That is another issue, but one where Ira and I agree.)

All the studies I know show US health care costs are much (almost twice) more than government sponsored care in developed countries, and the quality is very uneven. Children’s health care and preventative health care is very poor in the free-enterprise US compared to universal health care countries. There is an obvious reason.

Ira says, “It is dangerous to turn markets -particularly those that are critical to our economy- over to the government . . .” On the contrary, it is dangerous to turn markets – especially those critical to our health – to private industries that make the most profits when you are sickest. The incentives of health care delivery are the opposite of food delivery.

It does not occur to Ira that a healthy child and preventative care make no profits. In fact they would decrease profits. Big Pharma focuses on drugs that sick people need for the rest of their lives or that are addictive. Even if you are healthy and normal you will be sold drugs for children’s “hyperactivity” drugs for sleep, drugs for anxiety, and drugs for middle-age ED. Obesity is epidemic, but it becomes profitable when you get diabetes. Antibiotics are oversold and are culturing drug resistance species.

Private health care industries are simply not interested in the common welfare because well people are not profitable. They exist only for profits and only for their own products for the sick. They do not do research on rare diseases that are not profitable. Competition is for immediate profits, not the long term well being of the entire society.

That is why we have the NIH and FDA, and why the entire developed world has government administered health care.

Ira Glickstein said...

Howard, much as I respect you I think you have grabbed this problem by the wrong handle.

I know you are not a conspiracy type person, but you seem to be saying that:

(1) The food industry is in cahoots with the drug industry by pushing fattening foods so more people get diabetes.

(2) The drug industry could come up with one-time cures for certain diseases but that they purposely withhold these cures so they can sell less effective drugs that must be taken for the rest of your life.

(3) That antibiotics are purposely oversold such that drug-resistant variants will arise, requiring the development of still more powerful and expensive anti-biotics.

When I was a kid I was told that the oil companies had bought up the patent for a pill that would cost only ten cents and, when added to a tank of regular water, would run your car like gasoline.

Sorry, but I would more likely believe that the NIH and the FDA are purposely screwing up the health care system such that their budgets are increased. Of course I do not believe that they do it on purpose. They do not have to. The inefficiency of larger bureaucracies is sufficient to explain their incompetence.

(And, if the NIH and FDA are so competent, why have THEY not come up with one-time cures for all these diseases?)

You also (IMHO) take the elitist view that most people are too dumb to understand the value of preventative care and healthy food for themselves and their own families so the government must put their fat fingers on we citizens for our own good. But, don't you know plenty of academics who are as smart as you who are overweight, smokers, drinkers, and do not get enough exercise? What government agency will become the uber-elite taskmasters for the elite?

Finally, all the people who work in the food and drug and medical industries have parents and spouses and families, with children and grandchildren. So you really believe that they would purposely sacrifice the health of their loved ones (and themselves) to push unhealthy foods and supress more effective drugs and medical procedures to increase their profits?

Sorry, I guess I am just not as cynical as you. It is said that cynicism is idealism gone sour.

Ira Glickstein

Howard Pattee said...

Ira,
Please do not twist what I say into such absurd implications. I stand by my statements as simple facts. There is no “conspiracy” or “sacrificing health of loved ones.” Obviously, profits are always the bottom line for businesses of all kinds - otherwise they go out of business. Also, these are not just my opinions. Here are samples from dozens of sources.

“The problem comes when profits are made out of other people's losses. The US pharmaceutical industry is immensely profitable, enjoying a current rate of return on investment that is over twice the US average. But these profits come at great expense to people in the developing world.”
Source: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1071375/

Drug companies fail to make vaccines because of small profits. “. . . pediatricians all over the country have not always been able to vaccinate children on their regular schedules. The reason: vaccine shortages.”
Source: http://www.jhsph.edu/news/magazine/archive/Mag_Fall02/vaccines.html

"The combined profits for the ten drug companies in the Fortune 500 ($35.9 billion) were more than the profits for all the other 490 businesses put together ($33.7 billion) [in 2002]. Over the past two decades the pharmaceutical industry has moved very far from its original high purpose of discovering and producing useful new drugs. Now primarily a marketing machine to sell drugs of dubious benefit, this industry uses its wealth and power to co-opt every institution that might stand in its way, including the US Congress, the FDA, academic medical centers, and the medical profession itself."
Source: http://www.wanttoknow.info/truthaboutdrugcompanies

Also, remember that drugs are just a fraction of the health care industry. Single imaging and operating instruments now cost millions. Government grants were necessary for their development and profitable use.

Ira Glickstein said...

Howard, I'm pleased you reject the "absurd implications" that the food and drug industries are in cahoots to increase obesity and diabetes and withhold more effective drugs.

However, you write: "Obviously, profits are always the bottom line for businesses of all kinds - otherwise they go out of business." [my bold]

Nope, profits are not the CAUSE but rather the RESULT of providing quality products and services at reasonable prices.

If a business jacks up prices and reduces quality to boost bottom line profits, that may work for a little while, but, given a competitive market, customers will leave and they will go out of business.

That is, unless an industry can get the govenment to place its fat fingers on the scales and prevent market forces from doing their magic. Which is exactly what the drug and medical equipment industries have done since Medicare was enacted.

Please have a look at the graphic at the end of my main topic posting. In the early 1960's, before Medicare, total private and public spending on health care in the US was 5.2%.

By 1972 it was 7% and disability was added to Medicare. By 1980 it was 9% and drugs were added. By 1989 it was 12% and Omnibus Budget Reconciliation was passed.

By 2001 total public and private health care spending was up to 13% of US GDP. So they expanded it to younger people and, in 2003 passed the Medicare Modernization Act which shot spending up to the 18% it is at today.

Does anyone really belived the cynically titled "Affordable Health Care Act" will really constrain health care spending in the future?

Ira Glickstein

PS: No one has taken me up on my idea for the "Affordable Food Care Act". If the government is doing so well by taking over the health care industry, why not expand the "savings" to food as well?

Eric Schayer said...

Howard, glad ur back on the site again - & thanks for posting many of ur classic papers online.

You and IRA have an engaging discussion going. Here's my two cents -

http://ericschayer.Tumblr.com/post/32738908243/a-few-thoughts-on-healthcare-one-factor-in-high

[I wasn't able to paste in here comments composed in notepad, which Tumblr permits.]








Ira Glickstein said...

Thanks Eric Schayer for your comments. Here is a clickable link to your website: http://ericschayer.tumblr.com/post/32738908243/a-few-thoughts-on-healthcare-one-factor-in

What do you think, Howard?

And here is Eric's text which I like so much that I am copying it to this comment:

"A few thoughts on healthcare.

"One factor in high costs is Truman’s price freeze, circumvented by employers by offering health insurance. This removed downward pressure on costs when price controls were lifted, precipitating the current crisis.

"Tort law has also driven up costs. In a free market, a patient might have a choice to assume more risk contractually while paying lower cost to a provider who is incurring less risk.

"Functional free markets also gear patent duration to expedience. Drug companies maintain anticompetitive advantages long after patent expiration.

"Relaxing supply-side strictures like licensing and prescription laws might further reduce costs, given sufficient time for markets to adapt by providing patients with medically expedient information.

"These ad hoc proposals might help or not - certainly not comprising a complete proposal. However, they do reflect sometimes overlooked approaches involving less government.

"In the long haul & in the big picture, I think government is the most dangerous thing of all - due to size and monopoly on force. How many wars are due to government bungling and how many lives were lost?

"Homeland security has bought 1.2 billion rounds of ammo - almost half of which shatter on impact. How can that be reconciled with federal healthcare?

"You can’t separate these issues. Big government begets big government. The growth needs to be challenged on many fronts - not merely geopolitical.

"E"


Although I generally support the thrust of your argument and reasoning, I am uncertain about what you refer to as "Truman’s price freeze" and would appreciate more info on how that "removed downward pressure on costs when price controls were lifted".

Your reference to the seemingly unreasonably large number of rounds of hollow-point ammunition purchased by Homeland Security is something I have heard about, but I am not sure about the official government explanation. Can you shed any light on that?

I absolutely agree that the lawyers are responsible for a large part of the total health care costs because of IMHO unreasonably large malpractice awards. I support national legislation that would limit awards for medical errors to actual costs plus perhaps $250,000 for pain and suffering.

While I favor the patent system which should allow inventors and the corporations that employ them to cash in on new drugs and medical equipment, I think these advances should pass into the public domain when the first patent term expires.

I also think prescriptions should not be required for most drugs, so long as they are non-addictive and the adverts and packaging contain FDA-approved information and counter-indications and warnings.

Looking forward to more info from Eric and I hope we'll see more of Howard's wisdom. I'd also like to see comments by others. This thread has generated 59 page views so far, so others are reading.

advTHANKSance

Ira Glickstein

Howard Pattee said...

Ira asks: “So you really believe that they would purposely sacrifice the health of their loved ones (and themselves) to push unhealthy foods and suppress more effective drugs and medical procedures to increase their profits?”

I didn’t say that, and I don’t know how they think. Ira just gives his opinion. I am just stating facts. Here is a sample of more facts (Source: Wikipedia). You decide.

In July 2012, GlaxoSmithKline pleaded guilty to criminal charges and agreed to a $3 billion settlement of the largest health-care fraud case in the U.S. and the largest payment by a drug company in the US. The settlement is related to the company's illegal promotion of best-selling anti-depressants and its failure to report safety data about the top diabetes drug.

In September 2009, the United States Department of Justice announced that Pfizer had agreed to pay $2.3 billion to settle civil and criminal allegations that it had illegally marketed four drugs: Bextra, Geodon, Zyvox, and Lyrica "with the intent to defraud or mislead" by promoting the drugs for non-approved uses; this marks Pfizer's fourth such fine in a decade.

In November 5, 2004 the medical journal The Lancet charged that "the unacceptable cardiovascular risks of Vioxx were evident as early as 2000. On May 20, 2008, Merck was found liable for using deceptive marketing tactics to promote Vioxx and 30 states will split the $58 million settlement.

In 1999, Roche pleaded guilty to participating in an illegal price fixing cartel. It paid a $500 million fine, then the largest fine ever secured in the U.S. The European Commission fined Roche 462 million Euros for the same infraction in 2001.

These large companies seldom appeal these fines because the bad publicity would further lower their reputation. Fines are a small fraction of their enormous profits.

I agree that many aspects of government are too big or unnecessary. What do you think Big Pharma would conspire to do if there were no government oversight?

Howard Pattee said...

Ira has a fairytale view of free markets. Historically, lack of government oversight has always ended in instability and failure (See Wikipedia: "List of recessions in the United States" - note the reasons).

I agree with Eric that government is dangerous; but the only ultimate check on human greed and corruption is a democratically elected government, because when a democratic government becomes corrupted we can vote it out, unless of course the voting process itself is corrupted.

I need to point out that fraud in the drug industry is just a drop in the bucket compared to bank fraud and bank failure as the result of greed and lack of government oversight. Almost all the biggest banks have been convicted of cheating customers and fraud including Bank of America, J. P. Morgan, Chase, Citigroup, Wells Fargo, Goldman Sachs Group, Morgan Stanley, not to mention foreign banks like Barclays and Credit Suisse.

The irony is that these crooks must be saved. If the government had not bailed out these banks the world’s financial system would have led to a total disaster. As it is, we still have a disaster for millions of individuals. Many small banks that were not to blame still failed because of the loss of credit, and had to be revived by government takeover. (See http://www.fdic.gov/bank/individual/failed/banklist.html)

I agree that government has grown too big in many other areas other than finance, but financial corporations have also grown too big and powerful to stay honest, and they are literally out of control.

Eric Schayer said...

Ira, the official explanation per Homeland Security Press Office is that they ordered 1.2 Million rounds of ammo, & because of purchasing agent's speech impediment and faulty connection in unregulated telecom industry, vendor heard 1.2 'Billion', and, since A/P Dept was on the line, they cut the check to cover 1.2 Billion rounds.

So it balanced perfectly, and since duck hunting season was right around the corner, they figured, heck, we've got a good season's worth of ammo here, & they kept it for hunting.

The original order called for rounds that make civillians SCATTER on impact, which was unfortunately construed as ammo that SHATTERS on impact, but the stuff was in production before the error was noticed.

So, personally, I'm reassured that our government is doing its utmost to fight this war for our treasured values and way of life.

And I am truly humbled that I ever questioned the government's sincerity.


U?

E

Ira Glickstein said...

Thanks Howard and Eric for your most recent comments.

Howard says I have a "fairytale view of free markets" and Eric contributes a fairytale satirical explanation for the recent enormous government contracting for hollow-point bullets.

As (future) President Romney said in the most recent debate, we need regulation for the free market to work. I agree and I do not propose a totally unfettered marketplace. The government needs to regulate the currency, evaluate and issue patents and copyrights, have courts to judge disputes between people and businesses, and protect us all from enemies both foreign and domestic, enforce contracts, using police and military power if necessary to do these few necessary things.

There is no need for the government to pick winners and losers. (Usually whoever they pick is a loser :-() unless they are so politically-connected or "too big to fail" that the government subsidizes them despite the clear voice of the marketplace.) There is no need for the government to set industry standards or regulate products to supposedly protect the public.

For example:

(1) the Underwriters Laboratory is an industry and insurance company-funded organization that puts their UL label on products that meet electrical safety standards. Would we be safer from electrocution if the government was in charge of this necessary task? Would products be more or less expensive? Would those few people who are injured get more or less compensation?

(2) IBM set a standard for "IBM-compatible" computers and other companies (in opposition to IBM itself :^) extended those standards. The result is that with absolutely no government regulation you and I can purchase hardware and software from many different companies and retaillers that works just fine together. The reason is that if something does not work fine, hobbyist magazines will report the problems, leading retailers will not carry it, and the public will be protected. Not only that, but this system makes for better gadgets and business products at ever lower prices.

(3) Apple and others set their own standards, in competition with "IBM-compatibles" and they too have delivered wonderful products that work well. That keeps the "IBM-compatible" companies on their toes. No government regulation needed. Amazing improvements in quality and very low prices.

(4) Cellphone companies have continually improved bandwidth and services with no government regulation (other than the doling out of the frequency spectrum which could and probably should have been privatized - for example Internet domain names are doled out by a international entity).

(5) The same for TV and HDTV.

In summary, if the government just gets out of the way, except for the few really necessary functions of enforcing contracts and protecting us from enemies, the free and competitive marketplace and free press and other media will protect the public just fine.

Ira Glickstein

Ira Glickstein said...

[Continued from previous comment]

The 2008 crash in property values was caused by corporate greed, yes, but that greed would have been nipped in the bud had the government not pretended to be competent to regulate the financial markets and provide what turned out to be a false guarantee to purchasers. That is called a "moral hazard".

If medical care was really a true contract between employers (on behalf of their employees) and individuals (on behalf of their families) with insurance companies and health care providers, with a cost-price mechanism and real competition and the free media to report those who cut corners, the health care industry would have progressed like the electronics industry, with higher quality and lower prices.

I know you will not agree, Howard, but that is because you believe the fairytale of government competence.

Beyond some size, NO large enterprise is efficient. For example:

(1) White Castle sold burgers for "a buck a bag" and had stores all over the country. Why are they not the leading fast food company today? Because they got mired in their own size and companies like McDonalds and Burger King ate their lunch. Same story with A&P supermarkets.

(2) IBM had a sterling reputation in the computer business (both hardware and software) when I worked there in the 1970's. They let Apple and others create the personal computer market and then jumped in with a pretty good product line, IBM PCs. Why is IBM not the leading personal computer company any more? Because start-ups Microsoft and Apple we smaller and hungrier and more enterprising and came along and ate their lunch. I was there (but in the military systems end, not the PC side) and saw IBM get mired in its own size and stifling bureaucracy. Apple is now the highest value company in the world.

Ira Glickstein

eric schayer said...

Howard & Ira,

I'm surprised that neither of you seem to have identified what I consider the underlying problem with the financial institutions.

The legal tender law pulls the rug from underneath all private citizens & businesses who could otherwise discriminate solid gold coins from worthless paper.

Under such a law, whoever can manipulate a printing press or other digital means of creating money from thin air can determine the financial [mis]fortunes of us all -- for their own presumed enrichment.

Without such a law, all financial and government institutions can do whatever they like with their imagined financial instruments. The rest of us can go about our business with monetary transactions in gold.

A corollary here is that the fractional reserve system has contributed to the financial collapse, predicated on the legal tender law. It doesn't help either that prohibitions implicit in the tenth amendment on government borrowing and lending were ignored.

There is more to this, obviously, but these are the foundations of the crisis. And it does not appear that the system works, because no one would have allowed this otherwise.

Whether the result of corruption, stupidity, temerity, or accident is hard to say, but ultimately people allowed this to be done. Intelligent people who can smell a hundred dollar scam cannot notice a multi-trillion dollar scam under their noses. The bigger the lie, the easier to get away with.

I sometimes wonder if the financial institutions' being headquartered in a gun-control state (NY) was a necessary condition for the massive fraud. Anywhere else might have been too dangerous for the scammers.

Also, the legal tender law was upheld by the Supreme Court, whose salaries are paid in the paper or electronic equivalent of legal tender. Coincidence, I'm sure.

Eric

eric schayer said...

Ira,

Per your October 2nd reply to my post:

"Although I generally support the thrust of your argument and reasoning, I am uncertain about what you refer to as "Truman’s price freeze" and would appreciate more info on how that "removed downward pressure on costs when price controls were lifted".
"

... let me clarify I think Truman imposed wage & price controls in WWII, which were circumvented by employers offering health insurance in lieu of raises.

This lifted downward pressure on healthcare prices by consumers who no longer needed to pay out of pocket.

The rest is history. Healthcare prices have risen at rates well in excess of inflation since then, precipitating the current healthcare crisis.

At least, that's my current understanding. If I were more ambitious, I might try to verify some of this.

Begging your indulgence,

E

Ira Glickstein said...

Eric, thanks for your two recent Comments. I'd be interested in Howard's opinions, but here are mine:

1) The Legal Tender law requires businesses to accept government-issued paper money. Lacking a solid link to gold or silver (or even sheep :^) or some other more foundational relationship to real value, the government can simply print more money, or raise the debt limit, or take other actions that devalue the paper in our pockets. History is full of just such excess.

I am living on my company pension, which is NOT inflation- or cost-of-living-adjusted, and Social Security, I am subject to price increases. For example, my monthly payments for the Independent Living facility can and do go up by cost-of-living plus a couple percent. Runaway inflation, due to lack of a solid link to real value, could deplete our savings and raise our monthly payments beyond our fixed income.

2) I agree that government fixing of wages can lead to employers providing increased benefits to get around that type of law so as to keep valued employees.

That said, I am not sure I favor a gold standard. I do not understand big finance, but I think there is something about having enough money around to allow for supply of credit and to lubricate markets - or something like that. What we need is restraint on government spending. Perhaps a solid link to GDP?

Ira Glickstein