BuckeyeBlog

Not very, according to this article:

Health insurers, in fact, ranked below many other industries in profitability, including other health sectors, according to the latest Fortune magazine rankings. While pharmaceutical companies were the third-most profitable industry last year, with a 19.3 percent profit margin, health insurers ranked 35th, with a 2.2 percent profit margin. Health insurers also ranked lower in profitability than medical products and equipment makers, pharmacies and medical facilities.

Those who say the profit motive destroy health care in this country are ignorant not only of basic economics but also the health care marketplace. Many health insurers and health care providers are non-profit organizations. And even those health insurance companies that are for-profit don’t have very high profit margins. Even if the federal government confiscated every dollar in profit made by health insurance companies it would do almost nothing to reduce overall health care spending.

With the price of gas rising, you hear a lot of people condemning “price gouging.” Economist Alex Tabarrok has a great post about why these people don’t know much about markets over at his superb blog Marginal Revolution:

Many people think that price is determined by historical cost.  Price is never, ever, determined by historical cost. Price is determined by supply and demand.  If supply or demand change then the price changes regardless of historical cost.  Last year’s fashions?  The price falls regardless of cost.  Chopped up dead sharks?  If demand is high, the price is high regardless of historical cost.  If the demand for gas were to suddenly fall, the price of gas would fall too, regardless of cost.  In the present situation the supply of gas has been reduced and the price has gone up.  Historical cost is always irrelevant.

Is the high price due to supplier gouging?  Not at all.  If you want to blame anyone for the high price blame your fellow buyers not the suppliers.  A high price means that some other buyer is outbidding you to obtain the limited supply.  It’s buyers who push up prices in a competitive market and it’s suppliers who push prices down!

The Columbus Dispatch ran a front page story by Dan Gearino today on a report being released by the Economic Policy Institute:

The trade deficit with China has cost Ohio more than 100,000 jobs since 2001, and the greatest losses have been in manufacturing, according to a study being issued today.

The report by the Economic Policy Institute, an advocacy group in Washington, D.C., was timed for release days before China hosts the Summer Olympics in Beijing.

(more…)

“They cannot and will not fail,” presumptive Republican presidential nominee Sen. John McCain told reporters.

Great. A fierce competition to see who is the biggest socialist.

Everything can fail. Everything. Especially government, and most especially government that shuts off the private markets. And when governments fail, people are quite likely to die as a result. Everyone is better off when private markets are allowed to function, and the single greatest characteristic of private markets is exactly failure.

Thank God for it. It’s the only thing that allows success.

The Blade is unhappy that there are “those who just don’t care about the long-held concept of fiduciary responsibility in the business sector .”

Yikes. It’s a bit hard to tell what the Blade is after there, but it’s a good guess that what they’re really referring to is, you know, decency, which is a bit different than fiduciary duty.

Somebody made a ton of money, had friends, etc. Was it outrageous? No doubt. But the issue is, if there really was a breach of fiduciary duty, then the failure is as much or more in the courts as anywhere else, so take the complaint to the courts if that’s the problem.

If there wasn’t a breach of fiduciary duty, then the complaint should land with the relevant shareholders, as in, what the dickens is the matter with you people, paying this bozo that much?

But neither of those paths will be followed. Instead, someday there will simply be more regulation. Until it stops moving, then there will be subsidy.

“Doctors have complained for years that Medicare payments have failed to cover rising costs.”

Apparently some fool built fiscal responsibility into the Medicare program. Formulas require a cut in payments whenever the budget is blown, which is, let’s see, every period it’s measured. Or so this article implies, anyway.

Then Congress rushes in, ever the hero, and takes firm action. It waives the fiscal responsibility requirement, so everyone can pretend there’s no problem.

As Father PJ says, if you think health care is expensive now, wait ’til it’s free.