A Simple Arithmetic Problem

An word problem for those thinking about picking a President in November. Don’t worry, I did all the hard 3rd Grade arithmetic for you and the answer key is available at the bottom.

The government needs to buy a product that’s sold by multiple resellers. The product wholesales for $100 for each unit and the government plans to buy millions of them.

The least expensive resellers charge a 67% markup because if they charge less than that their shareholders are unhappy and the company might lose the "Strong Buy" rating on their stock. If the government decides to get a wholesale license as a volume purchaser it’ll cost them 2% overhead to handle the extra costs of paperwork and inventory.

Should the government:

1. Get a license to buy wholesale and pay $100 for the product plus $2.04 overhead costs
2. Pay the $166.67 to the least expensive supplier
3. Negotiate a better deal from the suppliers to pay no more than $117.65 for the life of the contract

Those are real numbers in a real multi-billion dollar deal with real taxpayer dollars on the line.

Which choice should the President make?

 

Answer Key

Now that you’ve had a chance to make your decision, let’s look at the answers:

Choice 1 is a single payer healthcare insurance program like Medicare

Choice 2 is what we did prior to “Obamacare”

Choice 3 is what “Obamacare” did by requiring insurance providers to spend no less than 80-85% of their insurance fees on payments for medical costs rather than for overhead, promotions and profits for their owners

Tags: arithmetic, capitalism, economics, Politics