Friday, September 20, 2013

Sick days and other Inelastic Goods.

Downtowne Grounds
12oz Soy Mojito Mocha

I love it when smart people quote me.  John Stewart does it periodically, like when he suggested "decoupling" health care from jobs.  I have used that very term to argue the same point.  Recently, I viewed this link to a video wherein John Green (another smart person) mentions (as I often have) the "inelastic" nature of health care.

For the record, I think that Obamacare is about the dumbest way to move forward that we could have come up with - but it is moving forward.  I only hope that, in time (preferably short time), we come back to the subject and, instead of compulsively trying to defund it, we make some real improvements to it.  But the one thing that I do not think we should do is return health care to the "Free Market."  Because the health care market is inherently not "free."

Free markets, or rather, markets that can move freely, are elastic.  Coffee is an elastic good.  (Arguably, if I'm being woken up by Henry at 6am and I just got to bed at 1:30am).  That means, if you jack up the price from two bucks to twenty bucks, people will stop buying coffee (as much).  However, if, as Mr. Green suggests, your life-saving prescription goes up from, say, 7 bucks to over 100 a month, you're still going to find a way to pay for it.  The demand is "inelastic" because it does not change dramatically when the price does.  And because of that inelastic nature, this is where the government has an appropriate place to step in.

Now, stepping in can take many forms - be it through regulations of private insurers or providing health care as another public service, or some combination thereof.  But the goal is simply to prevent people from being exploited, since they are inherently vulnerable in such markets.  This is why, as I mentioned above, we need to stop allowing health care to be treated as a "perk" that either is or isn't in someone's benefits package, and instead view it as a mandatory cost of living that should be reflected in their paycheck (one way or another).  If an employer can't or won't provide affordable health care coverage to their employees, that employer shouldn't pay a fine to the government, but should pay those employees enough to provide insurance for themselves.

There's another inelastic market: paychecks.  People don't hold up signs saying, "Will work for food, shelter, and extra vacations days."  They stop at "food."  People will vastly undersell their product - their work - just to keep from starving.  This is why I advocate so strongly for a movable, livable, minimum wage.  Wages have been allowed to drop so far below inflation (as well as disproportionate increases in the cost of inelastic things like health care and college tuition), that we've essentially had a fire sale on American Labor for the last several decades.  Any MBA should be able to tell you that that is an unsustainable business model.  And many economists (like Robert Reich who has some kind of new PowerPoint documentary about income inequality) have been trying to tell you that it is an unsustainable economic model.

Again, there are more than a few ways to try to balance the inequality of an inelastic market.  Unions are one way, and their decline has paralleled the decline of middle-class income.  Government regulations of wages and other employment issues are another means of rectifying the imbalance of power.  Any solution has its pros and cons, but the lack of intervention is no solution at all.  Because such markets generally utilize very destructive means to "correct" themselves over the long run. 

And I, for one, prefer my revolutions with more dancing and less broken things.


  1. Hi Chandra.
    Ed, posting from Southern Spain
    M.D. Family Physician working for the Spanish National Health System.
    Very proud of our Health Care.
    What do you think -from there- about our Health System?

  2. Hi, Ed!

    The problem with Americans is that we don't think at all about Spain's Health care system because no one here talks about Spain's health care system. Even during the debate over the Affordable Care Act, there was no real discussion about any other country's health care system. Canada and Britain were brought up as scare tactics by the opposition. There was no real discussion or analysis of all the many other methods of providing health care.

    I was home a lot around that time with some serious morning sickness so I got to watch a lot of the speeches in full. It was a ridiculous spectacle. The amount of lying... There is almost no such thing as an informed discussion about health care in this country. I did skim the wikipedia entry you mentioned. It seems entirely reasonable, at least in the structure of it. I'm sure there is room for criticism if you live with it, but I am envious from a distance. I could tell you so many terrible stories...

  3. I'm sure you've seen the movie Sicko. I really have nothing more to say about that.

    I really haven't had a chance to spend a lot of time studying the nature of politics since the election and I don't know a WHOLE lot about "Obamacare." I do know that my Planned Parenthood nurse practitioner is pushing for it. She's cool. I have a feeling I'll find out real soon what it's all about and I hope it's better than what I have right now, which is a 3.5 hour wait to get only hooha, cholesterol, and glucose levels checked out.