Take Profits Out Of Health Care? Profits Save Lives!

Posted by Jason | Posted in Economics, Government, Health Care | Posted on 18-12-2009


Last night I’m watching John Stossel’s new show on Fox Business. His topic was health care. As usual, Stossel was right on blaming health insurance (third party payer) for the rising prices. Of course, the socialists in the audience and in some of the on the street interviews were having none of it. What was to blame? PROFITS! These idiots think that profits drive up the costs. I even debated a socialist on Facebook who said under socialism goods and services would be the cheapest they can be, because there would be no profit. By definition, he thinks removing profit lowers price. His exact words were, “Profit wouldn’t even be considered in a socialist state, so drugs would automatically be at their lowest possible price.”

It’s silly to think that removing profit makes things cheaper. Price is a function of supply and demand, not profit. Socialism always generates more demand while dwindling supply, so there is no reason to think that not having profits would lower price. That is a simple economic fact. The other hazard of removing profit though is lack of innovation. This is where removing profit is deadly.

The biggest profits are generated with the introduction of a new innovation. The innovator has first dibs on the market. They can charge the most to recoup their investment costs. After investment costs are recouped, they generate tons of profit. I know that sounds horrible in the eyes of many socialists, but what happens next is competitors see the huge profits. They then rush in to capture some of the profits for themselves. By jumping on the profit bandwagon, they bring the goods and services to more people. How do they differentiate themselves in order to get a piece of the profits? They either innovate, making the product or service even better, they seek efficiencies, which lowers costs, or they undercut their competitors, seeking less profits in hopes of taking some of the market. This whole process drives down the cost through innovation, efficiencies, and out right price wars.

This competition always drives profit margins down. Anyone who gets in on the early stage of a new technology can tell you “enjoy it while it lasts.” Once the profit margins are driven down so far, you end up with the companies who can deliver the products or services with the best quality and efficiency.

Meanwhile, the innovators are back at it seeking the massive profits that come from new products and services. This is what leads to our ever improving livelihood.

So what does this mean for health care? If we remove the boot of the government, we can have this same process in health care. It does happen inspite of the government now, but there is no doubt that it is hampered and slowed. For instance, moving a drug through the FDA is estimated to cost close to $1 billion dollars and takes 15 years. How many drugs are there that are needed, but can’t produce the profits necessary to overcome the costs imposed by the FDA? How many people die without those drugs?

If you remove profits, you remove innovation. If you remove innovation, people die. New drugs, treatments and cures are not developed.  If you remove profit, you remove competition. It’s competition that brings products and services at ever cheaper prices to the masses. If people can’t get the products and services, people die. While all these socialists scream, “No profits in health care!”, they should be screaming “Let people die, let people die!”

Watch Stossel’s Health Care show here:


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Comments (3)

What amazes me most is that these socialists truly believe that socialism is the perfect economic model. They “conveniently” forget that history tells a different story.

In theory, socialism sounds wonderful, but unfortunately it’s structure breeds favoritism because it favors a planned economy. That’s primarily why you really only see socialism in a communist country. As you’ve mentioned before on this blog, if planned economies were so successful, Russia and China would have the highest standards of living on earth. Unfortunately we all know that’s not the case.

When will people learn that if you remove the incentive to become wealthy, you remove the incentive to work and to take risks. Once you remove those incentives, you have a stagnating economy.

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John, that’s for sure. Socialism is the greediest of all systems. In the free market, you trade your labor for money. That money is then used as a medium of exchange to trade your labor for a good. In socialism, you don’t need to trade your labor for a good. You are not exchanging a certain amount of your labor for an equal value of a good. That sure sounds greedy to me. That almost sounds like what socialists would say is profiteering. Greed is expecting more than one deserves. If you haven’t labored, then you don’t deserve anything. If you expect something that you haven’t earned, you are greedy. It is the socialists who are the greedy ones. Greedy bastards.

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one thing I also saw today that would have aided in your debate… profits in the health insurance profits make up 6 tenths of 1% of healthcare spending.

Talk about a red herring. Removing the profit from the sale of health insurance would have zero effect on the cost


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