An Economics Lesson for Paul Ryan

March 13, 2017 By: El Jefe Category: Healthcare

Paul Ryan was on Face the Nation yesterday morning talking about the Republicans’ new anti healthcare bill they’re trying to sell to the American people.  Host John Dickerson tried numerous times to get Ryan to acknowledge that millions will lose their healthcare and that all major medical associations are opposing the measure.  Ryan engaged in his now familiar obfuscation with a big smile, repeating this most often used mantra of giving people “choice” and fostering “competition” in health care delivery.

Here’s the problem with the Republicans’ key economic assumption in their ideology.  Choice and competition come from a functioning free market.  You can call our healthcare delivery system in the US a lot of things, but “free market” is not one of them.  Here’s why:

Over 30 years ago, Michael Porter of the Harvard Business School developed a model to describe markets.  In his model, he describes 5 essential forces that control markets.  To be a fully functioning market, the power of buyers must be in parity with the power of the sellers.  At the same time, buyers must have alternatives from existing competitors, and those competitors must be continually under threat from new entrants into the market as well as new products or services that can substitute for the product already being sold.  An example: You want a car; you have numerous choices between new and used, expensive or thrifty.  You can buy online, you can buy from individuals, you can buy from numerous dealers.  You can check prices online, making the market relatively transparent.  As well, you can choose when you buy that car.  Or you can buy a motorcycle.  Or you can not buy a car and take Uber.  This market balance represents a relatively free market, subject to truth in advertising and financing laws.

Now, let’s look at our healthcare markets: Sellers (insurance companies and healthcare providers) dictate coverage and pricing.  The polices are intentionally complex and pricing is completely opaque.  In most Americans’ cases, EMPLOYERS pick which plan their employees can buy.  In this market, the sellers hold all the power and the buyers have only the choices that are dictated.  Additionally, the insurance markets are protected by state agencies, making it very difficult for alternatives to get into the market.  To make matters worse, when you’re sick, the LAST thing you have time or the inclination to do is price shop for healthcare.  Removing the market protections the ACA provides puts individual buyers at  the mercy of this cruel government protected market.  Republicans are trying to jam free market ideology into a market that is anything but free.  The cabal of insurance companies and healthcare delivery companies is impossible to to fight, especially by individuals.

So, with these clear market realities that make the Republican plan unfair and unworkable, what does that say about Paul Ryan’s argument for his plan?  There are two possible answers: 1) Ryan is stupid with no understanding of the realities of markets; or 2) He’s a lying sack of sh*t (sorry Momma) who is looking out for his base and the interests of his largest donors to the detriment of everyday Americans like you and me.

I’ll take Door Number Two, Alex.

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14 Comments to “An Economics Lesson for Paul Ryan”

  1. Best explanation I’ve ever encountered. Heard the car analogy several years ago – prior to Obamacare – by Fareed Zarkira. Was apt then and now. I think Republicans like Ryan have strong sociopathic tendencies that preclude any empathic understanding of health care. The only solution is to marginalize or eliminate them at the ballot box.

  2. Yay Michael Porter and Harvard B School, cause there’s no BS like HBS!

  3. I still remember when the health care industry got its lackeys in Congress to make it illegal to buy prescription drugs from Canada, while Big Pharma moved their production to whatever country was cheapest for them.

    And then claimed that buying from Canada endangered consumers ’cause ya can’t trust them furriners.

  4. LynnN:

    I actually ran into medical personnel at a drs. office that told me Canada was a third world country, a danerous place to buy Rx meds and all pharms made their meds in the USA. I shut her up when I told her that most were made in India (call a pharmacist or google it) and that Canada was a first world nation like us (but Canada is actually a first world nation because it has single payer). Geesh!… The ignorance that is out there…

  5. Papa, when my father was totally young and had immigrated to this country, when asked where he came from her told them “Canada”. He pretty much got real shocked stares and then something like, “you don’t look Chinese!” He was amazed to discover upon arrival and getting a job that there were far more people in the U.S. who hadn’t finished school at all than in Canada. And no he did not take a job away from a deserving American. The job that led him to meeting my mother involved taking care of horses and despite heavy advertising, the company who owned them just did not get a response until my father showed up. And that was at the start of the 1930’s. He held that job through most of the 30s despite the economic crisis and then got a job in an automobile factory that very quickly began producing tanks and airplanes. And nowadays he would be considered an illegal alien as when he crossed the border he did not have official papers. Back then, despite the requirement for them by the U.S. in 1924, people did not know what they were!

  6. Masterful job, El J.

  7. Re: door 1or 2;. Not only is Lyan a lying POS, I suggest that while he may not have the IQ of your average lightbulb, he is in fact not​ too bright, as evidenced by his mediocre degree earned with a mediocre grade average at a mediocre college. We ain’t talkin’ Rhodes Scholar material here, folks, which I’m sure is the main reason you will never see him on The Good Dr. Maddows program.

  8. “I’ll take Door Number Two.” Me too, but as Edward says, Lyin Ryan isn’t a bright light either. In addition, he has nothing to say about the racism festering in his in party. Note slime ball racist Stupid King in Iowa. They’re both typical snacilbupeR.

  9. RepubAnon says:

    This chart more clearly shows what they taught us in Econ 101: classic free market theory hits problems in the health care field. Examples: how much would you pay to stay alive? Can you really go out to bid for the best deal to sew up that severed femoral artery? The doctor is advising an expensive procedure – do you have enough knowledge of medicine to decide whether that doctor is correct?

    I can see Paul Ryan deciding that he’d rather buy a new car than pay for his kid’s much-needed operation… I doubt he’d decide that he’d rather die from lack of care than incur a large medical bill…

    Trump, of course, would simply refuse to pay the doctors…

  10. JAKvirginia says:

    El Jefe: Masterfully clear and concise. Door #1 or Door #2? No need to choose. It’s a swinging door. #1 on one side, #2 on the other. Either way you walk you’ll be right.

  11. maryelle says:

    Ryan and the rest of those money-grubbing Rethuglicans, especially the hard core who claim this is Republican welfare,
    couldn’t care less about the consequences to the people, as long as they get rid of the healthcare plan instituted by a black Democratic President. It is wealthcare and has very little to do with health.

  12. Tilphousia says:

    Awe gee, why do I have to pick just one when both fit? Ryan is a sociopath. And a stupid sociopath to boot. His understanding of issues is none to none. He dodges questions and constituents. Why not just let the special interests in his district vote for him and the real people vote democrat? He’d get about 8 votes, and spend the next two years trying to figure out what happened.

  13. Gary Halter says:

    Ryan is not very smart. His many proposals for budgets are always wrong. His power point presentation was one of the worst I have ever seen. Paul Krugman often says the same thing–just not very bright. He is devoted to Anna Rand (sp). Most people get over her by the end of their Sophomore year. She is required reading for his staff. This does not mean he is not a lying sack of dog shit.