Wednesday, January 09, 2013

Third party payer systems are expensive

The Atlantic provides this chart (hat tip: Instapundit) comparing inflation of college textbooks, medical care, and new homes with the general consumer price index:

While professors are responsible for selecting college textbooks, they are not responsible for paying for them.  The students are.  Under normal circumstances, a professor will never even see the price tag on the book he selects.  The result is rapid inflation.

Medical care is similar.  Physicians and patients may select treatments or tests but, under the current system, neither pays for them.  The insurance company does.  The result is rapid inflation.

In other words, incentives matter.

This is a fact that seems to be obvious to everyone except liberals.

PREVIOUSLY on liberal thought as it relates to economics:
Centuries pass but liberalism is unchanged
Sayet's theory of liberalism
Given a choice between working and free money, people choose free money
Higher taxes yield less revenue
Homeless flock to city with generous benefits
Student test scores improve despite school funding decrease

1 comment:

diletanti said...

Sorry, it's not exactly to the point of your posting,
but would not like to miss that:

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