Why healthcare should be managed as a natural monopoly

Posted on

In industries in which there is inelastic demand, in industries in which people have to buy a product or service regardless of prices charged, free competition does not work in the best interest of customers. Prices charged are not inexorably driven down by competition to an optimum level for customers and for all stakeholders, to the lowest prices that fairly compensate all factors of production in the industry, including a rational return for the owners of capital.

In such industries the price system degenerates in such a way that providers can fix prices about the way they want, as in the case of high priced drugs, and engage in price discrimination, as in the case of medical services and treatments, that is, charging different prices to different customers. This behavior creates chaotic situations in which almost no one knows what many treatments will or should cost.

The solution is to regulate such industries by the state as full monopolies, or as what are called natural monopolies, in which prices are set by the state, as in the cases of electricity and water utilities. In such cases, under capitalism, effective and ethical regulators set customer prices at levels that provide competitive market prices for suppliers of raw materials, competitive wages and salaries for workers and managers, and competitive returns on investment for the owners of employed capital.

Medicine and health services are basically public utilities, since they are required, like electricity and water, demand being inelastic, caused by people not wanting to die or become impaired or go blind or go crazy and empathetic human beings not wanting to suffer grief and sadness caused by having to observe these things happening to people in droves, unnecessarily.

Consequently, if people cannot pay for their medical treatments providers have to treat them free for humanitarian reasons, and this forces and allows providers to set exorbitant uneconomic prices for customers that can pay to compensate for their losses on those that cannot or will not pay, causing chaos and widespread unfairness.

Therefore, as Obama pointed out, a decent society must provide affordable health insurance for everyone in order to control medical prices. What Obama did not fight hard enough for, unfortunately, is the solution for the whole problem, the logical conclusion that the federal government must provide affordable health insurance for everyone, aka Medicare for All, as a good natural monopolist, not only setting prices for national health insurance, but also fair and rational national prices for drug and medical treatments, just like good state regulators set prices for electricity and water.

The US is the only developed nation on Earth in which medical bills are a major cause of bankruptcy for citizens, a painful and degrading fate, but a fate less painful and degrading, perhaps, than people becoming debt slaves the rest of their lives, harassed by horrendous medical bills hanging over their heads, and bill collectors, caused by avoiding premature deaths and impairments, by agreeing to pay for drugs and medical procedures at the time of service, or die.

The only cure for this inhumane mental anguish, pain, and suffering is the federal government regulating the healthcare industry as a natural monopoly, using proven time-honored necessary and rational procedures under capitalism.

The federal government should allow insurance companies to sell all the life, automobile, and home insurance policies they want, but it should get them out of the business of selling health insurance; and federal regulators should start fairly and rationally regulating drug and medical prices, while providing rational and fair rates of return on invested capital for all providers, using standard procedures used forever in regulated natural monopolies.

Federal regulators probably won’t do this because politicians won’t let them do it, since elected senators, representatives, and presidents need campaign contributions from fat cats running the healthcare industry, one of the most profitable industries in the US, earning exorbitant irrational uneconomic profits because of being allowed to operate as an unregulated monopoly. To verify this just take a look at the stock price increases of healthcare corporations relative to the Standard & Poors index since the Crash of 2007.

To consider that satisfying the money, power, and fame needs and drives of one hundred thousand or so politicians, healthcare industry corporate fat cats, and healthcare industry professionals and employees, caused by not having a national health service, would count more in the US than curing the spiritual, economic, and psychological pain and suffering of one hundred million or more ordinary citizens caused by not having a national health service is mind boggling, another sad example of the venality, callousness, corruption, obtuseness, and ethical incompetence now reigning in Washington.

Feel free to forward, reprint, or otherwise disseminate this article any way you see fit.

Richard John Stapleton, Editor & Publisher, Effective Learning Report, 32 East Main Street, Statesboro, Georgia, July 20, 2017

Richard John Stapleton is an emeritus professor of entrepreneurship, organizational behavior, ethics, and business policy at Georgia Southern University, who writes on business and politics at effectivelearning.net.

Effective Learning Report Updates, July 2017

July 16, 2017

The cost of not having a national single payer healthcare system in the US

I’m not sure the cost is $1.7 trillion per year for US citizens, as this article asserts, but I would be willing to bet the figure is not too far off the mark of reality.

Read all about it, right here…

The Cost of Not Having Single Payer: $1.4 Trillion Per Year

July 13, 2017

As if people just discovered fake news last year. There have always been lies and rumors of lies, and little certainty about anything economically and politically, thanks to humans lying by commission and omission, not only making shit up but hiding the truth, as in keeping secrets, especially classified state secrets. The problem is worse now because there has never been a professional liar on the world stage like Donald Trump, and there has never been so much to hide.

An America paradox: Pillorying fake news while promoting false flags

By Matthew Maavak

Published in the Intrepid Report

http://www.intrepidreport.com/archives/21668

 

July 13, 2017

This article is an eye opener based on serious intellectual comprehension, by Paul Street. The Fourth of July will never be the same after you read it.

On American Revolution

By Paul Street

Published in COUNTERPUNCH

“It’s true that slaveowner Thomas Jefferson’s July 4, 1776 Declaration of Independence (DOI) articulated the revolutionary notion that the people have the right to dissolve a government that no longer serves their interests.  But the “American Revolution” was a national independence movement led by wealthy landowners, slaveowners, and merchants who feared uprisings from below.  They wanted more breathing space to develop further systems of racial oppression, territorial conquest, and class rule.  For them national independence was required among other things to prevent social revolution.  The last thing the nation’s wealth aristo-republican Founders wanted was a world turned upside down.”

Read all about it…

https://www.counterpunch.org/2017/07/04/on-american-revolution/

 

July 13, 2017

Here is a must read article with real intellectual merit by Margaret Flowers, a pediatrician with seventeen years experience, now professionally writing and lobbying for a single payer Medicare for all system. Be sure and read her linked article in this article explaining why the US healthcare system is so inferior to the health systems of other developed nations.

To Fix the ACA, We Do Not Need a Public Option, We Need a Private Extraction

By Margaret Flowers

Published in Truth-Out

“2017 is the make or break year for the Affordable Care Act (ACA). Seven years in, the flaws of the ACA are clear — tens of millions are still without health insurance, premiums and out of pocket costs are rising and causing people to either avoid and delay care or go into debt, and the US continues to rank poorly in health outcomes. There is one way to fix the ACA, and I call it the Private Extraction.

“What Are We to do?”

Read all about it…

http://www.truth-out.org/opinion/item/41191-to-fix-the-aca-we-do-not-need-a-public-option-we-need-a-private-extraction

 

July 13, 2017

Nancy Pelosi Rejects Single Payer Being Added to Democratic Party Platform: By blasting the proposal, the Democratic Party ignores its voters

By Michael Sainato

“Politico reported on May 3 that House Democrats want Republicans to pass an Obamacare repeal bill in the House, citing that the vote could be used against Republicans in the 2018 midterm elections.

“Democrats affirmed this report by chanting “hey hey hey goodbye” to Republicans after Obamacare repeal marginally passed in the House by a vote of 217 to 213 on May 4. This strategy is terrible for a variety of reasons. First and foremost, it reveals that the Democratic Party is willing to sell out constituents just to receive some attack fodder.”

Read all about it…

http://observer.com/2017/05/nancy-pelosi-rejects-single-payer-health-care/

 

July 13, 2017

Why Healthcare Should Be Managed as a Natural Monopoly
 
by Richard John Stapleton
 
In industries in which there is inelastic demand, in industries in which people have to buy a product or service regardless of prices charged, free competition does not work in the best interest of customers. Prices charged are not inexorably driven down by competition to an optimum level for all stakeholders, to the lowest prices for customers and prices that fairly compensate all factors of production in the industry, including a rational return for the owners of capital.
 
In such industries the price system degenerates in such a way that providers can fix prices about the way they want, as in the case of high priced drugs, and engage in price discrimination, as in the case of medical services and treatments, that is, charge different prices to different patients. This behavior creates chaotic situations in which almost no one knows what many treatments will or should cost.
 
The solution is to regulate such industries by the state as full monopolies, or as what are called natural monopolies, in which prices are set by the state, as in the cases of electricity and water utilities. In such cases, under capitalism, effective and ethical regulators set customer prices at levels that provide competitive market prices for suppliers of raw materials, competitive wages and salaries for workers and managers, and competitive returns on investment for the owners of employed capital.
 
Medicine and health services are basically public utilities, since they are required, like electricity and water, demand being inelastic, caused by people not wanting to die or become impaired or go blind or go crazy and empathetic human beings not wanting to suffer grief and sadness caused by having to observe these things happening to people in droves, unnecessarily.
 
Consequently, if people cannot pay for their medical treatments providers have to treat them free for humanitarian reasons, and this forces and allows providers to set exorbitant uneconomic prices for customers that can pay to compensate for their losses on those that cannot or will not pay, causing chaos and widespread unfairness.
 
Therefore, as Obama pointed out, a decent society must provide affordable health insurance for everyone in order to control medical prices. What Obama did not fight hard enough for, unfortunately, is the solution for the whole problem, the logical conclusion that the federal government must provide affordable health insurance for everyone, aka Medicare for All, as a good natural monopolist, not only setting prices for national health insurance, but also fair and rational national prices for drug and medical treatments, just like good state regulators set prices for electricity and water.
 
The US is the only developed nation on Earth in which medical bills are a major cause of bankruptcy for citizens, a painful and degrading fate, but a fate less painful and degrading, perhaps, than people becoming debt slaves the rest of their lives, harassed by horrendous medical bills hanging over their heads, and bill collectors, caused by avoiding premature deaths and impairments, by agreeing to pay for drugs and medical procedures at the time of service, or die.
 
The only cure for this inhumane mental anguish, pain, and suffering is the federal government regulating the healthcare industry as a natural monopoly, using proven time-honored necessary and rational procedures under capitalism.
The federal government should allow insurance companies to sell all the life, automobile, and home insurance policies they want, but it should get them out of the business of selling health insurance; and federal regulators should start fairly and rationally regulating drug and medical prices, while providing rational and fair rates of return on invested capital for all providers, using standard procedures used forever in regulated natural monopolies.
 
Federal regulators probably won’t do this because politicians won’t let them do it, since elected senators, representatives, and presidents need campaign contributions from fat cats running the healthcare industry, one of the most profitable industries in the US, earning exorbitant irrational uneconomic profits because of being allowed to operate as an unregulated monopoly. To verify this just take a look at the stock price increases of healthcare corporations relative to the Standard & Poors index since the Crash of 2007 at https://us.spindices.com/indices/equity/sp-500-health-care-sector.
 
To consider that satisfying the money, power, and fame needs and drives of one hundred thousand or so politicians, healthcare industry corporate fat cats, and healthcare industry professionals and employees, caused by not having a national health service, would count more in the US than curing the spiritual, economic, and psychological pain and suffering of one hundred million or more ordinary citizens caused by not having a national health service is mind boggling, another sad example of the venality, callousness, corruption, obtuseness, and ethical incompetence now reigning in Washington.
 
Feel free to forward, reprint, or otherwise circulate this essay any way you see fit.
 
Richard John Stapleton, Editor & Publisher, Effective Learning Report, 32 East Main Street, Statesboro, Georgia, July 15, 2017.

 

 

 

 

Effective Learning Report Updates

June 30, 2017

Nancy Pelosi’s opposition to a federal government single payer system…

Seems to me a single payer health system at the federal level is a no brainer for we the people. This Demo gentle lady house leader favors the states trying to do it but not the federal government. This article does not give a single good reason why we should not have single payer at the federal level. What is your real reason for not pushing single payer at the federal level, gentle lady demo house leader? We have a right to know. It appears you only care about the demo party, not we the people.

Read all about it…

Observer

http://observer.com/2017/05/nancy-pelosi-rejects-single-payer-health-care/.

 

June 30, 2017

Ah, the magic of finance at the highest levels

Probably the US will eventually do what Japan is doing now. Just punch digits into a computer at the Federal Reserve, call the resulting number money, use it to buy the Federal debt interest free, and then forget about it. Poof the Federal debt is gone. About twenty trillion dollars worth now…

Sovereign Debt Jubilee, Japanese-Style

by Ellen Brown

Japan is selling debt to its own bank, which returns the interest to the government.

This is the most hopeful article I have read in a long time, indicating there really may be light at the end of the tunnel for Earth’s economies, written by a brilliant lady lawyer, Ellen Brown, who is also a renowned money and banking expert, who writes at her Web of Debt Blog.

Read all about it…

Published in Truth-Out, an Internet source of news and analysis

http://www.truth-out.org/news/item/41099-sovereign-debt-jubilee-japanese-style.

 

June 30, 2017

Worried about the Federal debt?

According to the Congressional Budget Office federal government cash inflows will increase 9.5 percent next year, but cash inflow minus cash outflow will be negative more than one trillion dollars.

Read all about it…

http://www.cnsnews.com/news/article/terence-p-jeffrey/cbo-income-taxes-95-next-year-debt-climbs-more-1-trillion#.WVWm_C-uxDQ.facebook.

 

June 30, 2017

As much as I never liked Fox so-called News and Hannity this audio interview with Camille Paglia does get to the heart of the matter.

Well worth a listen.

http://www.breitbart.com/video/2017/06/21/camille-paglia-blames-dems-for-destroying-journalism-it-is-going-to-take-decades-to-recover/.

 

June 30, 2017

If you ever had any doubt that the man lies, his many lies are listed here by the New York Times. Maybe you think lying does not matter, that all politicians lie and so forth, and Trump has his heart in the right place and he will actually be good for the US and the world in the end, despite his lying. Who knows? It may be impossible to prove any president in the last sixty or so years did more harm than good during his time in office, with the possible exception of Bush II, given his lying about and invading Iraq and Afghanistan, and lying about what he knew about 9/11.

Read about Trump’s lies…

https://www.nytimes.com/interactive/2017/06/23/opinion/trumps-lies.html.

 

June 30, 2017

Here is an emergency room MD telling a health care story like it is from his perspective.

Well worth a look and listen.

https://www.facebook.com/richard.stapleton.397.

 

June 30, 2017

Sanders says Republicans should be embarrassed about health care

Well worth a listen…

https://www.facebook.com/richard.stapleton.397.

 

June 30, 2017

WELCOME! To the Stapleton Gallery of Folk History and Conversation, and the FREEDOM, FAIRNESS AND PROGRESS PARTY. The FFPP.

Join now! Here’s how!

From a passage I wrote in 2004 on page 645 of BUSINESS VOYAGES: MENTAL MAPS, SCRIPTS, SCHEMATA, AND TOOLS FOR DISCOVERING AND CO-CONSTRUCTING YOUR OWN BUSINESS WORLDS, 745 pages, a business bible I wrote and first published in 2008:

“I am not a Democrat, or a Liberal, and for sure I am not a Republican, or a Conservative. I am a member of the FFPP, my own creation, the Freedom, Fairness, and Progress Party. If you would like to join this party, send no money, but act in such a way as to encourage all people to act in truly free, fair, and progressive ways. Most Democratic congress people seem about as devoid of workable solutions for real problems in today’s world as Reagan and Bush II, although I will say I think Democratic politicians in Washington in general have been more Christian-like than Republican politicians in Washington since 1980. At least they did not take from the poor and give to the rich. Most Republican and Democratic politicians have done little in the last 25 years but slavishly vote for their party line, as they were told by their party bosses, to conserve their chances of getting help from their party bosses in their next election.”

Vote the rascals out ASAP and replace them with free, fair, responsible, progressive members of the FFPP, who want to do the right thing for all people.

Unfortunately, as of this writing, July 1, 2017, it seems most demos voting in the 2016 primaries were not very bright, not having the sense to vote in their own interests, since most voted for Hillary, the establishment candidate, instead of Bernie, who probably could have beaten Trump in the Electoral College.

Get rid of the Electoral College.  The Electoral College makes the popular votes of voters in red states count more than the votes of voters in blue states, a gross insult to voters in blue states.

The last thing we need now are more party-line pandering establishment-financed career politicians, which Trump is not, out to feather their own nests and the nests of their sugar daddies ensconced in their corporate headquarters atop skyscrapers and their favored elite rich few by slavishly voting for bills, acts, laws and rules in their favor, at the expense of we the people on the ground, in the on-going US class war, exponentially increasing the incomes and wealth of the elite rich from year to year, creating ever-widening inequality, inexorably destroying our society from the inside, as climate change destroys it from the outside.

Trump is not a career politician. Even worse, he is a troglodyte reared in penthouses atop New York City skyscrapers, who never worked a day in his life at a real job for a real boss, a classic example of the class of people who pay career politicians to vote in their favor. Working and middle class voters in 2016 actually voted for one of the US’s most successful landlords, no doubt somehow expecting him to work in their interests after he gets in office as president.

Most local politicians are ethical conscientious citizens doing their best to serve their fellow citizens, but the farther from home the government is located for which politicians are elected the more likely politicians are to be corrupted and bought off by large corporations and the elite rich, causing them to vote in their interests, rather than in the interests of their fellow citizens.

Get rid of flat taxes. Large corporations and the elite rich now pay about the same after loophole effective tax rate as the middle class. Reset the top ALETR to above 70 percent where our wisest ancestors set it before 1980, who knew you have to have progressive income tax rates to prevent inequality from destroying society. Use the new tax revenue, borrowed money, and money magically created by the US Federal Reserve (by simply punching digits into a computer and calling the resulting number money) to directly fund infrastructure jobs in green energy, transportation, education and the like to help the unemployed and underemployed and small businesses on main streets, to create a multiplier effect that will create even more jobs as people spend the money the new jobs provide, restoring a semblance of fairness in our society.

Reduce military spending.  The US now spends some six hundred billion dollars per year on its military, over half of discretionary spending in the US yearly budget, more than the next eight largest nations combined spend on military activities around Earth.  We have become an imperialistic war-mongering nation.  Most of the military budget is for offense, not defense.

Get rid of the Gramm-Leach-Bliley Act.  Bring back the Glass-Steagall Act of 1933 which was gotten rid of in 1999 by the Gramm-Leach-Bliley Act, signed by Hillary’s husband Bill when he was president, possibly the most unethical and harmful piece of US legislative action of the 20th Century, which gave bankers in too big to fail Wall Street banks permission to gamble with bank money backed by depositors and citizens using derivatives, financial weapons of mass destruction, turning the money and banking system into a giant gambling casino, putting the deposits and pension money of all citizens at risk to this very day, unfairly biasing the economic system in favor of banksters.

I used a spinning arrow, called the Classroom De-Gamer™, over 30 years in all my university case method business courses at Georgia Southern University to point out and randomly select the discussion leader of the day, thereby insuring every student in the class had an equal opportunity to be the class leader of the day, thereby teaching democratic leadership behaviors. I am now convinced you could randomly select intelligent knowledgeable citizens off the streets of the US and send them to Washington replacing all sitting politicians and the US government would improve overnight, since these citizens could use their common sense to vote for things benefiting we the people, having not been paid with corporate and elite rich money to fight on the side of large corporations and the elite rich in the US class war.

Randomly selecting leaders is not a novel idea. The ancient Greeks had the idea and used it as early as the 6th Century bce. The process is called sortition.

Random selection of political leaders would be better than the election systems we now use—for the simple reason randomly selected leaders would not be beholden to vested interests, or corrupted by the money current politicians have to raise from rich patrons to purchase TV and mainstream media print advertising to get elected to federal offices, money that has to be paid back once they get in office, insuring the government is run primarily to benefit large corporations and the elite rich, not we the people.

Get rid of Citizens United of 2010. This abominable 5-4 Supreme Court decision affirmed into law by five right wing judges was probably the most debilitating US Supreme Court decision of all time, contributing mightily to the destruction of democracy in the US. It defined corporations as people with free speech and therefore free to bribe politicians with as much money as they wished to enact laws reducing their taxes and bending the rules of the economic game in favor of corporate CEOs and the elite rich, causing an exponential rise in economic inequality and peonage in the US.

Join the USVRA (United States Voters Rights Amendment) movement, founded by William John Cox, at http://usvra.us/, to amend the US Constitution to get rid of Citizens United and establish a fair and effective process of democratic voting in the US. Wm Cox and I are long-term friends, having sat in the same Methodist Sunday School Class back at Wolfforth, Texas in the mid-1940s. I serve on the advisory board of the USVRA.

 

June 30, 2017

How could this happen?

A rural hospital association representative says the Trumpcare bill in the Senate will close hospitals, and people will die…

Read all about it…

https://www.dailykos.com/story/2017/6/26/1675375/-Rural-hospital-association-representative-This-bill-will-close-hospitals-People-will-die.

 

June 30, 2017

Why Health Care is a Natural Monopoly

by Richard John Stapleton

Warren Buffett’s got the right idea in the interview below on the cause of the US medical services problem, an inability to control costs. The bottom line is that in industries in which there is inelastic demand, meaning people have to buy something almost no matter what price is charged, free competition does not work for consumers.  Prices charged are not inexorably driven down by competition to the lowest level necessary to fairly compensate all factors of production in the industry, including a rational return on invested capital. The system degenerates so providers can fix prices about the way they want, as in the case of high priced drugs, and engage in price discrimination, as in the case of medical services and treatments, that is, charging different prices to different customers.  This behavior creates chaotic situations in which almost no one knows what many treatments will cost. The solution is full monopoly, or a natural monopoly, in which prices are set by the state, as in the case of electric and water utilities. Medicine and health services are basically public utilities, since they are absolutely required, like electricity and water, because few people want to die or go blind or go crazy or whatever, and decent human beings can’t just sit back and watch people die, go blind, go crazy, etc. in droves unnecessarily.  Consequently, if people cannot pay for their medical treatments providers have to treat them free, and this gives providers permission to set exorbitant uneconomic prices for others to compensate for their losses on those that cannot pay, causing chaos and widespread inequities.  Therefore, as Obama pointed out over and over, you have to have affordable health insurance for everyone to control overall medical costs.  What Obama did not fight for, unfortunately, is the  conclusion that the federal government should provide affordable health insurance with Medicare for all, as a good natural monopolist, setting prices for Medicare health insurance and treatment payments just like good state regulators set prices for electricity and water.  The US is the only developed nation on Earth in which medical costs are a major cause of bankruptcy for citizens, an ignoble fate, but a fate less onerous, perhaps, than living the life of a debt slave the rest of your life, with an astronomical unpaid medical bill hanging over your head, that enabled you to avoid a premature death or impairment.

Here’s an interview with Warren Buffett on health services.

https://news.grabien.com/story-warren-buffett-endorses-single-payer-health-care-we-can-affo.

 

June 30, 2017

God forbid we should be intimidating

10 Signs Your Personality is Intimidating Others (Never Tolerate #7)

Read all about it …

http://educateinspirechange.org/spirituality/10-signs-personality-intimidating-others-never-tolerate-7/.

 

June 30, 2017

Lake Wobegon Schools

More and more schools it seems are becoming Lake Wobegons where all the children are above average and all the women and men are beautiful and brave, according to this article in Zero Hedge at http://www.zerohedge.com/…/high-schools-drop-valedictorian-….

See inside my book Born to Learn: A Transactional Analysis of Human Learning for a fuller discussion of these issues at https://www.amazon.com/Born-Learn-Transactiona…/…/0692584331.

 

June 30, 2017

Let’s hope violence in the streets between conservatives and liberals does not continue to increase.

Read about the root causes of political violence in my unfortunately prescient article by clicking below.

http://blog.effectivelearning.net/conservatives-and-liberals-vs-freethinkers/.