Post-Keynesian Observations

Understanding the Macroeconomy

Summaries of Posts on Financial Crisis and Health Care

with 2 comments

Because blogs post your most recent stuff first, extended explanations end up backwards. For that reason, I put together summaries of both the financial crisis discussion and the health care posts. With these, you get them all together and in the right order:

Financial Crisis

Health Care

Dang, they are both over 20 single-spaced pages. Wish I got paid for this!


Written by rommeldak

March 29, 2010 at 8:14 am

2 Responses

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  1. You (and the open source movement) prove that one needs not to be paid huge sums, or any, in order to do something socially beneficial and high quality.

    I had never heard of the 4-firm concentration ratio, but think I will use it much more often. It is interesting that profits are needed in order for people to buy what can be produced, but perfect competition lets people the earned profits to buy more. So profits are both desirable and undesirable from the macro level. My sense is competition forces companies to constantly strive to differentiate their products less they go under. But with health care, while we do want insurance companies to innovate their way to lower costs, but not by unfair means. Could the private sector, under the right set of incentives lower costs and improve health outcomes better than medicare?

    I have a feeling health care delivery needs to be better orchestrated. Fund medicine development with government money with the condition that the medicines don’t get patented. As a guy who did NIH sponsored HIV research, I can safely say we will still do our best research with a middle class income, we never see the high profits we make for the executives of drug companies. The NIH grants are competitive, markets dont decide who gets them, but a pannel of experts and non-experts. It works well.

    Michael Porter who has spent a lot of time researching this stuff says we need to incentivize preventative care. Pay doctors more if their patients keep their chronic conditions well managed. Get rid of fee for service. Tort reform. Track costs for the full health care cycle to see what can be done about them. Simplify billing procedures (the airlines do this through IATA and etickets). Ensure universal coverage. Better coordination between primary health care providers and specialists.

    Technological innovation in medicine usually raises costs, not the opposite. Other countries have implemented cost controls. Their societies accepts that, ours may not. Maybe countries can distribute among themselves high cost specialties. Advanced chemo in australia, robotic limbs in the US, that way you get economies of scale discounts and the specialists get better at their craft. Its my own idea.



    March 29, 2010 at 1:21 pm

  2. Thanks for reading, Jeff! You are right that thinking about innovation is complicated–on the one hand, we might want firms to come up with new products, technologies, etc., but on the other, that increases their market power. At least such problems mean that there is a job for economists in trying to decide what to do!

    With respect to incentivizing preventative care, I stronly agree. I’m sure that there are a variety of things we could try here and we should experiment to see what best achieves the goal.

    Last, you make a good point regarding costs and technology. Indeed, they can raise costs, and it spreads throughout the system as even prices on more standard procedures may increase to underwrite the cutting-edge stuff. Again, experimentation (including the idea you suggest) is called for. Surely the US, at least, can do a better job than we see currently!


    March 30, 2010 at 8:45 am

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