News for hackers. Stuff that matters.

A comment on Break Up the Insulin Racket. Parent comment

Re:Break Up the Insulin Racket by harryh on Monday February 22, 2016 @08:28PM (#11155779)
"below efficiency levels" isn't some sort of moral statement, it's a mathematical one. It's not a question of moving sellers below their break-even point (you're correct that would obviously never happen). It's about transferring producer surplus to consumer surplus and introducing deadweight loss into the system.

https://en.wikipedia.org/wiki/Monopsony#Welfare_implications explains it pretty clearly for the example of labor.

[ Parent | on HN ]
Re:Break Up the Insulin Racket by dalke on Monday February 22, 2016 @09:36PM (#11156062)
"A mathematical one" in a simplified analysis which assumes a rational actor model which doesn't model what people actually do.

Or if you want to use the model, the deadweight loss in your evaluation can instead be interpreted as the price that people are willing to pay for the good feelings of knowing that everyone in the country has accessible and affordable basic health care.

[ Parent | on HN ]
Re:Break Up the Insulin Racket by harryh on Monday February 22, 2016 @09:51PM (#11156134)
> assumes a rational actor model which doesn't model what people actually do

Sure, but in the case of drug prices in countries with national health systems we don't really have any reason to think that the model doesn't reflect reality.

> the deadweight loss in your evaluation can instead be interpreted

Yes, this is exactly my point! The science of economics makes no judgement about the relative moral values at play here. That may very well be a tradeoff people want to make. Or it might not. Economics doesn't comment on that question one way or another, it nearly provides data on the practical outcome of the decision.

[ Parent | on HN ]
Re:Break Up the Insulin Racket by dalke on Tuesday February 23, 2016 @12:56AM (#11156901)
Which is why I wrote: Hence the questions of what "efficient" and "abuse" means, which go into the pricing negotiations.
[ Parent | on HN ]
Re:Break Up the Insulin Racket by nickbauman on Tuesday February 23, 2016 @01:46AM (#11157051)
People don't consume health care as a typical commodity. Choices you make around health care are existential. It's not just a cost calculation. So without a state actor you would still not have the behavior of an efficient market.
[ Parent | on HN ]