Hacker News new | past | comments | ask | show | jobs | submit login

The USA has a unique situation with its defense spending though, which skews that ratio in a sort of unfair way. On that same data you linked, if you look at dollars per capita instead of %GDP, the US is actually 11th and ahead of Germany, Iceland, and the UK, etc.

Now really, the stats you linked probably aren't even all that correlated with social spending. It's more likely a measure of the scope of bureaucracy.




Not only that, most of those countries have socialized medicine -- but socialized medicine isn't exactly an anti-poverty program. When the government takes an extra $1 from someone at the mean income and then provides them with $1 in health coverage, it shows up as $1 in government spending, but that's not redistributive. If the program didn't exist they could have taken the $1 and used it to buy $1 in health insurance, which is what happens in the US. Socialized medicine is only redistributive to the extent that the money comes from someone other than who receives the benefit. For healthcare spending probably 80% of the money isn't that, because it's mostly going to insure the same people who are paying the taxes.

The US couldn't raise taxes by an equivalent amount unless the money specifically went to healthcare in an equivalent way (because otherwise taxpayers would still need to have that money to buy healthcare), so you couldn't use it to solve homelessness.

The problem is that Social Security and Medicare in the US completely dominate social spending, and they're also the same thing. Or worse, since Social Security even gives bigger payouts to wealthier people who had higher incomes before retirement -- the least it could do is give everyone the same amount.

So we end up in a situation where we are at the same time spending too much on government programs and not spending enough on government programs, not because the amount of tax revenue is too low, but because the money we currently spend mostly isn't actually going to anti-poverty programs or public infrastructure or scientific research etc.


>> When the government takes an extra $1 from someone at the mean income and then provides them with $1 in health coverage, it shows up as $1 in government spending, but that's not redistributive. If the program didn't exist they could have taken the $1 and used it to buy $1 in health insurance, which is what happens in the US.

This is ignoring that a private insurer will take a profit so not all that dollar is returned in the form of care/insurance.


Yes, and more importantly that the government has massively greater bargaining power than someone at the mean income.

I am glad to have the government buying my healthcare for me, because they get a good deal for that $1.


The government isn't bargaining at all. It's dictating prices at that point. But price controls break everything. If you set the price too low you reduce supply. If a company knows they'll have to charge $5000/patient for a drug in order to recover the billion dollars they spend developing it but they also know the government will only pay $1000/patient, they don't bother to develop it. Meanwhile if their lobbyists can convince the government to let them charge $10,000/patient then they're in fat city on the back of the taxpayer.

Calibrating that balance correctly is the exact thing markets are good at. When you're spending your own money, you may be willing to pay $4000 more for a better drug, but only if it's $4000 better.


So when a big customer like Apple or Walmart applies pricing pressure on a component supplier, how do they pick a number?


>because they get a good deal for that $1.

That's not usually how government works in my experience.


Sounds like you need a better government!


It's not ignoring that at all. The insurer's profit comes from the investment of capital. Before they make their first dollar they have to lay out money to acquire an office building to operate out of, hire lawyers and actuaries to establish procedures to operate under, maintain a large pile of money in reserve in case there are an unexpected number of claims etc. The profits are the returns on that investment, and if it wasn't a private company then the public would have had to supply that capital instead. You don't get out of paying for it -- otherwise it would be easy to avoid by having the government establish an independent non-profit insurance company.


> You don't get out of paying for it -- otherwise it would be easy to avoid by having the government establish an independent non-profit insurance company.

no one is arguing that we arent paying. The point is, you are equating costs between public and private, and private has to take profit. Government doesnt.

Do we actually know that healthcare is a profitable industry if (like the government would have to) you actually cover EVERYONE?


> no one is arguing that we arent paying. The point is, you are equating costs between public and private, and private has to take profit. Government doesnt.

The point is that it does.

The private insurance company makes a profit because it, for example, owns the building it operates out of. That portion of its profit is attributable to the rent it could have received by renting out the building to the National Health Service in the alternative, which would then have that amount as an ongoing expense. You're still paying the same amount of money to the capitalist who owns the building whether you call it profit or rent. And the government could buy the building, but then it has to pay to buy (and maintain, and forego property tax revenue on) the building -- you're paying for it one way or another.

> Do we actually know that healthcare is a profitable industry if (like the government would have to) you actually cover EVERYONE?

The first thing to note is that the government doesn't cover everyone. There are unavoidably procedures it will deem too expensive and not cover, the same as private insurance. We can't afford to spend a trillion dollars to save one life.

But independent of that, the only way an insurance company doesn't make a long-term profit is if it's mismanaged. If you want more comprehensive coverage then that causes the premiums to be higher, but either way they'll just consult their actuarial tables and set premiums that cover the expected claims.

Where people run into trouble with private insurance is that they don't bother to buy it. If you go in and get a catastrophic coverage quote when you're healthy, it's a reasonable premium, which (because otherwise the insurance is useless) includes the right to keep paying that premium instead of a higher one even if you're diagnosed with something. But in a free market, if you get diagnosed with cancer after not bothering to buy health insurance, the premiums when you go to get it would then reflect the cost of cancer treatment. At that point you're basically buying an installment plan rather than insurance, because the event to be insured against occurred while you weren't insured against it. This is why requiring insurers to cover preexisting conditions doesn't really work unless you also somehow induce almost everybody to buy health insurance ahead of time anyway.


> Not only that, most of those countries have socialized medicine -- but socialized medicine isn't exactly an anti-poverty program. When the government takes an extra $1 from someone at the mean income and then provides them with $1 in health coverage, it shows up as $1 in government spending, but that's not redistributive.

Well, socialized medicine also takes $1.5 from someone at 1.5× mean income, and $0.5 from someone at 0.5× mean income, and provides to both $1 in health coverage. In this sense it is redistributive and anti-poverty.




Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact

Search: