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Jun 24, 2009

The Medicare Tomato Market

Medicare Tomatoes
06/21/09 - The Happy Hospitalist

Say that tomatoes were declared vital to life and made available free through the Medicare National Tomato Bank. This translates the story of the healthcare market to the tomato market. A long, readable, and informative post. This is only an excerpt.

[edited]  The government took over. A midnight Congressional mandate ended the free market in tomatoes, and replaced it with the Medicare National Tomato Bank (MNTB).

The demand for tomatoes took off. Grocery stores everywhere were selling out. Nobody could keep tomatoes in stock. The grocers were ecstatic. They sold their tomatoes and sent the bill to Uncle Sam, who then sent them a check for the market price. The people were happy. They were getting free tomatoes. Entitled Tomato Eaters (ETEs) everywhere loved Congress.

Unfortunately, the MNTB was not happy. They were paying the bill. That $200 billion tomato bill was rising quickly, faster and faster, 10% a year, year after year. The MNTB could not afford to continue paying for free tomatoes for everyone. Congress did something completely anti-American in an effort to control the costs of the MNTB. They took capitalism out of the tomato market.

In their stroke of genius, they tried something that had never been tried before under capitalism. They would lower the cost to the MNTB, not by cutting the demand (political suicide), but by paying only 80% of the market price.

The ETEs remained happy with free tomatoes. The grocers were not so happy.

(skip to near the end)

Access to free tomatoes was dwindling. No longer could the ETEs walk to the grocer down the street. They had to drive miles to get the government mandated access to the tomato market. Known as the emergency tomato grocer (ETG), the MNTB created rules and regulations that forced this group of grocers to stay open at all costs. No matter what. And to accept the price paid by the MNTB.

Grocer after grocer was bogged down by incredible regulatory costs associated with receiving 20, 30, or 40 cents on the dollar for their tomatoes. One by one, they all left the entitled tomato market. No longer could you walk into any grocer, grab a bag of your favorite guaranteed tomato, and expect someone else to pay for it.


The Medicare Tomato is the reality of health care delivery today. It is the backwards approach to the rationing of a service that is finite. Health care is not an unlimited resource, and the policies of rationing will always best be determined by the personal financial stake that everyone has in their health care.

This doesn't mean cash only, insurance only, free care for all, or universal access. It is a rational approach to control demand, whether that be means tested or income dependent. Whether that means balance billing or high deductable policies. Whether that means shopping for service and quality through price transparency. Whether that means strictly catastrophic insurance coverage. Whether that means tort reform to reign in defensive medicine. Whether that means judicious use of a gate keeper Medical Home model. Whatever it means.

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Grocery School
04/24/11 - Cafe Hayek by economist Donald Boudreaux

Suppose our system for K-12 education were applied to shopping for groceries. This puts the usual arguments for the delivery of education in a new perspective.

The comments are interesting, in particular:

  • Homeschooling Mama:  Why my children will never darken the door of a school.
  • Ravi:  A government supermarket is not far fetched. In India, I had to shop in these supermarkets, called Ration shops.
  • Bill:  Why would anyone operate in a poverty area? They certainly don’t open up grocery stores in those areas.
  • Donna Gordon: I shop at food stores for different purposes. Why can't I have choice in education?

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Health Insurance is Not Health Care
High health insurance premiums result from high health care costs. If health care were not expensive, health insurance would not be expensive.

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How To Make Child Care As Horrible As Health Care
11/29/11 - Reason by A. Barton Hinkle

[edited]  Nancy Pelosi once had trouble finding a babysitter. She wants a comprehensive solution to "do for child care what we did for health care reform". It is at the top of her agenda.

Hinkle explains how our healthcare system has been legislated into its current state, by describing how these same rules would apply to babysitting. You may think that babysitting is expensive and hard to get now. Just wait.

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