Quote:It's called supply and demand. It's called fixed costs. It's called inflation over time. It's called economics.


My point remains valid, and is why you cannot pinpoint rising price of healthcare to LBJ and government subsidies.


Just like food stamps, Medicare covers an overall package. Therefore, we should be seeing an exponential rise in food costs if your faulty logic based on a spurious correlation was correct. It's not. Subsidies, ie Medicare, is not the cause for the exponential rise in healthcare costs. It's more complicated than that. There are many variables that cause this rise.


I know it would fit the world view of evil subsidies from the bad federal government to be the culprit. But unfortunately for some, it does not work that way.


Beef has gone up in price because of increased demand, increased costs to produce beef--including land costs, labor costs, transportation costs, feed costs, water costs, inflation, etc, with supply opportunities that while are still good, are not keeping up with the demand.


To be fair, you can say food stamps increase the demand, sure. But the system isn't breaking down the way your model would describe. And that is because your hypotheses that government subsidies creates an artificial price bubble is incorrect.

 

Supply and demand are what was being discussed. If you give people a pile of money to spend on something, the demand goes up.


 

My point was that your food stamp analogy doesn't invalidate the claim that Medicare caused the price of medicine to skyrocket, because they are two different forms of subsidy. While food stamps may be a factor in the increased price of food, the requirement to choose between foods limits the effect. If Pepsi raises their prices some people will switch to Coke and use the savings to avoid not being able to afford Cheerios. Food stamps come in a limited amount each month. That's not the case with medical costs. You don't have to forego one procedure by paying the full price for another.


 

You may be right that Medicare wasn't to blame, or only partly to blame. 
But food prices vs. food stamps is not a valid comparison. I personally agree with Eric that insurance is the biggest factor. Health insurance may have been available before 1965, but employer-sponsored health insurance became standard about that time. The government giving tax breaks to employers but not to individuals amplified the problem.

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