Thursday, March 28, 2013

Healthy Consumption

The secret to healthy consumption is moderation. If you consume too much of anything it will be bad for you, This includes medicine.

The insurance industry (socialism is insurance run by the state) feeds us the line that we could get more health care if we just pooled our resources.

But, the problem is not a lack of health care. The problem is one of achieving balanced in our consumption of care.

Lobbyists for the health establishment claim that we must pool our resources to achieve an economy of scale. Pooling resources makes the lobbyists rich and powerful, but it does not improve care.

The idea of "economy of scale" only applies to production. It does not apply to consumption.

Supply and demand are not the same thing. Supply and demand have different logical traits. Economy of scale can increase productivity on the supply side, but when we try to scale things up on the consumption end, we end up with with waste and fat.

The secret to healthy consumption is moderation. The claim that we could get more health care by pooling our resources is completely mistaken. Supply and demand are different things. The logic that applies on the supply side does not apply on the demand side.

Interestingly, we see the biggest improvements in productivity in those areas of health care that are not covered by insurance. Notably, LASIK Surgery is not covered by most insurance policies. People must pay for this cosmetic procedure with cash. The ophthalmologists who practice in this area invested personal resources to achieve economy of scale on the production, which dramatically reduced the cost.

I contend that, if we broke up the insurance companies and rejected the fallacy that one can achieve economy of scale on the demand side; then we would see a balanced consumption of care.

Since doctors would be forced to compete for dollars, they would be forced by the market to change their practices to achieve the economy of scale that increases productivity and lowers cost.

Yes, supply and demand are both part of economics. However, the production of goods and the consumption of goods are two different things. The logic that applies to supply does not automatically apply to demand.
The key to productivity is economy of scale. The key to healthy consumption is balance.

The politicos who confuse these basic principles do the world a great disservice.

Now, if you don't mind, I need to go out and get a soda to wash down this cheeseburger.

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