Statist Illiteracy with regards to Healthcare Economics

Regarding the debate as to whether or not the government should be involved in covering health care costs for those who cannot pay, many statists have argued that cost shifting alone justifies government involvement in the health care industry. Cost shifting is the practice of charging customers two separate rates. The first group of customers cannot afford treatment, but hospitals admit them for free out of charity. The second group of customers can afford treatment. Cost shifting implies that the second group of customers is charged a higher rate to compensate for the losses incurred on treating the first group of patients. Advocates of government intervention will argue that if the government simply covers the cost of the nonpaying patients, hospitals will charge the paying customers less.

There’s only one problem with this statist argument. Cost shifting does not exist in the real world, and it never has. A simple glance at economics will explain why. When firms (hospitals included) decide what price to charge paying customers, they face a tradeoff. A lower price will attract more customers but a higher price will entail higher revenues per unit sold. If a firm charges a price too low, it will risk earning too little on each unit to earn the money needed for day to day operations. If a firm charges a price too high, it will risk selling too few units to earn the money it needs. Each individual firm will find the optimal price to charge paying customers to maximize earning potential.

Saved By Central Planning!

From Bloomberg:

U.S. stocks slid, capping the worst May for the Dow Jones Industrial Average since 1940, while the euro slumped and Treasuries rose as a downgrade of Spain’s debt rating and escalating tensions on the Korean peninsula triggered a flight from riskier assets.

So maybe the green shoots aren't so green after all.

How Rand (and Ron) Paul Are Scrambling American Politics

From TIME Magazine (and a photo essay here):

....Ron Paul's 2008 presidential campaign, with its message of limited government and its anti-Establishment ethos, created a kind of do-it-yourself model for the current activism shaking up politics around the country.

“I am romantic about the National Health Service. I love it."

Pres. Obama's nominee for director of the Center for Medicare and Medicaid Services, the office that oversees government health care programs, is a big fan of health care rationing.