[grafmax]

> Kinda like how expensive healthcare is since it is paid for by insurance.

If your argument were correct, socialized medicine would lead to higher costs, but it usually does the opposite. Insurance profit margins are a small portion of the overall cost in the US. In inelastic markets, when profit is removed, often you can see lower costs because profit by itself is purely extractive and in an inelastic market competitive forces are weaker.

[jeroenhd]

One of the controlling factors for socialized healthcare is that prices are negotiated down by the people paying for the medicine. In countries where private healthcare is extremely rare, pharmaceutical companies can choose between "less profit" or "no sales in that country at all". Sometimes they bluff and in rare cases that means public healthcare has to go without certain medication or certain vendors, but on the whole the price is kept under control (until corruption kicks in, at least).

When the people handing out cheques don't get a chance or don't bother to demand lower prices, things become incredibly expensive. Even if a party like a private insurer tries to negotiate the price down, the healthcare provider can always say "tough shit, guess your customers aren't insured then" as long as there's at least one insurance company willing to pay the full price.

You also see this with electric vehicle incentives. Governments incentivising people to buy electric cars by giving money directly to the consumer just end up with electric vehicles rising in cost because the money is essentially free anyway.

[grafmax]

Subsidies, depending on the market, often produce some degree of the effect you’re talking about, but it’s not black and white. The term is pass-through and full pass-through is rare with partial pass-through being typical. Often with subsidies (like for EVs) prices rise (showing pass-through) but it rarely cancels out, for example this study showing every $1000 of subsidy in California lowering the post-subsidy cost by around $800 - https://www.sciencedirect.com/science/article/abs/pii/S00472... - so only around $200 pass-through.

But this is a more elastic market than healthcare. To your point about negotiating power - it’s elasticity that gives negotiating power to consumers vs not.

[silvestrov]

A more important factor is that socialized healthcare often acts like a single buyer instead of each hospital being a buyer.

This can make even small countries into relatively large buyers which can make better and more long term deals.