Secretary's Spread

The Rednecks are on an emotional Viagra high (don't you just love mixed metaphors?  or are they petit fours?) now that they own the House.  They're determined to kill Health Care.  What they're too stupid to figure out is that they'll be killing Health Care for their own 1% selves along the way.  "No Child Left Behind" happened too late for these knuckleheads.  A bit of elementary arithmetic.

The Rednecks want to make Health Care available only to Rich Folks, those 1% folks.  What would you guess is the main reason a Rolls-Royce cost more than an Escort?  Yes, some of the materials are better in the Rolls.  But, the main reason is economies of scale in making Escorts.  The fixed costs (buildings and management and the like) get spread thinly across all those millions of Escorts.  For the Rolls, not so much. 

The same is true of Health Care, or any form of insurance.  As an economist, defrocked, I'll remind that "insurance" is a term of art in economics and means "shared risk".  We all pay a small amount of money in order to be protected from Bad Things, which are assumed to be rare, or at least not common, and random amongst ourselves.  The larger the pool of "us", the smaller the amount each of "us" has to pay.  Yes, as "us" goes up by 1 unit, the probability of a Bad Thing happening to any one of "us" does go up, but not by much.

Capitalists like to engage in market segmentation.  In other words, charging the maximum fee to discrete sub-groups in the pool of customers.  In a Free Market Economy, so beloved by Rednecks, capitalists can't do that.  In the Real World, they do it all the time; just ask anyone whose first teenager's got a license.  The Rednecks want to allow the insurers to segment the market and remove Poor Folks by simply imposing punitive prices.  They'll only end up shooting themselves in the head (aim well, it's a small target).

The Rednecks want to allow health insurers to segment unfettered (they do it today, but not nearly as much as they'd like).  What the Rednecks are too stupid to figure out is that all that fancy Health Care they don't want poor folks to have will get real expensive for Rednecks, not cheaper.  An MRI scan, for example, is cheap if the machine is in constant use.  Use it just once a week or once a month now that all those Poor Folks are removed from Health Care, and not even the remaining Rednecks will be able to afford one. 

And so it will go for the rest of Health Care.  Henry Ford figured this out a century ago.  That was one of the reasons he boosted his workers' wages.  He knew that he'd sell more cars at a lower price with the higher volume.  The same applies to Health Care.  The unit cost goes down as volume goes up.  Total cost can even go down.  How can that be?  If the Rednecks reduce the pool of insured enough, cheap high volume methods cease to exist, and only a few hand crafted ones for the .5% (the 1% won't even be able to afford Health Care) will be around.  Total cost will be sky high.

The effects of automation on production are well known.  They apply just as much to Health Care; the high cost stuff is high cost just because it is lightly used.