Supply and demand

supply and demand
Obviously another Republican who forgot about the free market system when he went to DC. –Seen on Tom Reed’s facebook page.

I don’t understand why a healthcare bill discussion is more focused on insurance company profits than on health care for everybody. Single payer is the only thing that makes sense.–Another opinion.

An early memory of mine is of my Dad bringing the distributor cap of his prewar automobile inside on a winter morning to warm in the oven so the car would start. I don’t know why he didn’t buy an aftermarket distributor cap; perhaps they were unavailable during the war or cost more than Dad cared to pay.  As long as he could start the car somehow, a new distributor cap wasn’t a necessity, so price may have been a consideration.

After the war, Dad bought a new car. Demand exceeded supply, so dealers loaded the cars they had for sale with every available accessory to raise the price. Dad wouldn’t have paid for white sidewall tires or a spotlight if he had the choice, but he needed a new car then and paid a higher price than he liked.

Price elasticity of demand is a measure of the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. It is the percentage change in quantity demanded in response to a one percent change in price. The demand curve shown in the graph is elastic for higher prices–demand falls sharply with price increase–and inelastic for lower prices–demand falls little with price increase.

Health care isn’t a luxury but a necessity. Like the demand for new cars after the war, demand for medical services is likely relatively independent of price. The idea of a “free market” answer to high health care costs is partisan dogma–a myth.

“Single payer” has the advantage of eliminating the middleman–for profit insurers. However it isn’t a panacea–it relies on two forces to keep prices down:

  • Government leverage over prices.
  • Economies of scale.

These forces are not certain to be effective, but they are more promising than the “free market” myth.

About whungerford

* Contributor at where we discuss the politics, economics, and events of the New New York 23rd Congressional District (Allegany, Cattaraugus, Chautauqua, Chemung, (Eastern) Ontario, Schuyler, Seneca, Steuben,Tioga, Tompkins, and Yates Counties) Please visit and comment on whatever strikes your fancy.
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4 Responses to Supply and demand

  1. Arthur Ahrens says:

    I’ve tried a couple of times to leave a reply. Both were unsuccessful.
    Please let me know how I can leave a reply successfully.
    Thank you.


  2. Arthur Ahrens says:

    I Still can’t post a comment.


  3. Arthur Ahrens says:

    From Krugman in NYT about healthcare and progressive agenda


  4. whungerford says:

    Thanks for an interesting article. Sadly, the GOP seems unready to accept the goal of universal coverage and to act to strengthen Obamacare. Even the Problem Solvers supposedly bipartisan proposal does no more than chip away at Obamacare. The one important thing that healthy America proponents get from the proposal is relief from President Trump’s threat to sabotage Obamacare, a threat which may be a bluff in light of public opinion.


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