Wednesday, October 5, 2016

Medicare is like a Bar Patron

Also a not completely fair but somewhat revealing description from PutANum:
The Medicare non-negotiation policy is like if I walked into the only bar in town and announced that I will buy all their whiskey at whatever price they charge. The bartender quickly raises the price of Jack from $20 per glass to $20,000, and the other customers in the bar are forced to leave in disgust, cursing my name. I spend half a million dollars getting drunk on overpriced whiskey and fall under the table, shitfaced and broke. Just before I pass out, I call the cops to complain angrily about the evil, price gauging, bartender.
The stuff about Medicare getting drunk and passing out serves no purpose for the analogy. It just makes Medicare look bad. But there is an economic lesson to be learned, when government throws a whole bunch of money into demand, prices go up.