Single-payer advocates would have us believe that the high cost of health coverage is caused by greedy insurance companies. And, predictably, the remedy these people recommend is more government regulation.
Well, as this excellent WSJ piece explains, more government regulation is not the solution. Why? Because excess government regulation is the CAUSE of high insurance prices.
To hear some of the presidential candidates, you’d think that health-insurance companies are the driving force behind the growing cost of health insurance. The more likely culprits are our politicians and the laws they pass.
Most government regulations are the result of pressure groups colluding with lawmakers to tilt the playing field toward some party in the market transaction, and health care is no different:
For almost every health-care product or service, there are at least two groups that want insurance to cover it: those who sell the products and services so they can get more business, and those who use the products and services to lower their out-of-pocket costs.
Both groups, therefore, push legislators to pass laws requiring insurance companies to cover these products and services:
As a result, government interference in and control of the health-care system is steadily increasing — and so is the cost of health insurance.
The concession that the insurance industry exacts for acquiescing in this kind of government meddling is protection of statewide markets and the right to charge exorbitant prices. But it doesn’t have to be this way:
Such micromanaging of benefits is unique to health insurance. State legislators aren’t nearly as aggressive in controlling life, property and casualty, and even auto insurance. As a result, those insurance markets function better and provide consumers with more choices.
So, how about we deregulate the insurance industry and remove the artificial barriers to competition? If we let insurance companies decide which products to offer the public, while opening up the market so that insurers must compete for our business, the cost of health insurance will go down and a big driver of health care inflation will disappear.
Comments 4
“If we let insurance companies decide which products to offer the public, while opening up the market so that insurers must compete for our business, the cost of health insurance will go down and a big driver of health care inflation will disappear.”
Yeah, the cost will go down because they (insurance companies) will only compete for the healthy people.
No regulation and only healthy people insured…. Now that’s a wet dream for your local CEO.
Posted 11 Feb 2008 at 11:35 am ¶Mr. Catron:
I thought you might be interested in my analysis of the uninsured that can be found on my website, http://www.politicalsunshine.com. The oft-quoted number of over 40 million uninsured includes everybody who is uninsured. That includes wealthy people who self-insure, young adults who choose to take the risk, people temporarily in-between jobs, people eligible for government programs that are not aware of it AND the children of all of these people.
My own estimate is that the number of people who want but cannot obtain insurance could be half of the gross number reported. . . still a problem but not nearly as big.
I recall you did an estimate at some time. Here are some of the sources for people to understand where the estimates come from.
Jeff Lapides
Posted 11 Feb 2008 at 10:55 pm ¶Hi Jeff, free market cure has a great breakdown of the uninsured that you should see. It is a video called Uninsured in America and is a real eye opener when talking to people who are a little unfamiliar with the concept that the uninsured may be uninsured by choice not ability. Maybe Catron could get some linky goodness.
Posted 12 Feb 2008 at 10:24 am ¶I have to agree with scott. Though David, you are right, health insurances prices would come down, because they wouldn’t cover expensive health care or sick people, it would be really great to pay 30% less for insurance to get 70% less service or value from it. I would like to add that any poor soul who believes that there is only one thing contributing to the high cost of health insurance should put down thier pen and pick up thier reading glasses. Oh and about those regulations, just wondering, who benefited from EMTALA put in place so that we could get emergency care despite our ability to pay? What about HIPPA? who made out on the ability to continue to buy health insurance despite losing your job? What about COBRA, who made out on that pesky rule that stopped rich private hospitals from dumping poor sick patients on community hospitals? OH, right Medicare, seems to me medicare absorbed some of the riskier people from the health ins market, shouldnt that actually bring down the cost of health care based on your “laws” of economics, sort of like flood insurance (provided only by FEMA)???
Posted 12 Feb 2008 at 11:59 am ¶Post a Comment