March 1, 2009

Political Stress on Economics

In a NY Times article, Obama Offers Broad Plan to Revamp Health Care, writes about the cut in federal payments to hospital and insurance companies, while funding those that do not have health insurance.

Even though this initiative, as the title states, is a vague plan for altering health care, the uninformed reasoning is still there. Obama may be more concerned about those in congress and the public in creating actions rather than the actual economic effects.

Some of these problems that Obama seems to dismiss is the breakdown of his suggestions in improving health care that this news article has presented. First, the article mentions Obama's theory of raising Medicare beneficiaries premiums. With the assumption that these Medicare beneficiaries are the middle class ,is contradictory to supporting the existence of the middle class. Obama seems to be transferring costs with those that cannot afford health insurance and those that can. The main flaw in this intiative is that instead of leaving those that have the ability to afford health insurance alone, Obama's goal will restrict those that can afford health insurance. Second, Obama is requiring that drug companies should supply generic drugs at a lower price for people to afford these cheaper alternatives. The problem yet again with this change is the idea of demand and supply. How will drug companies afford to lower their prices without being in the red? If a firm's goal is to maximize profits with increased costs because of the government wouldn't the firm increase the cost of drugs that aren't generic and choose to eliminate the avaliability of generic drugs so that it wouldn't have these regulations?

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