First government messes up the market. Then it calls for even greater regulation. It’s up to the GOP to point out what’s happened to private insurance.
The basic axiom of free-market economics is that government regulations mess up a market, which leads to misdistributions, which leads to more cries for government regulation.
You couldn’t find a better example than the current health insurance “crisis.” This week Congress is poised to take a problematic situation and make it much worse. There are indeed 45 million people who are uninsured in this country. Some of them (like my 23-year-old son) don’t want to spend $100 a month for what seems like a useless precaution but others are in dire need of insurance coverage and can’t get it. The basic reason is that, instead of allowing a free market to operate, we’ve done the following:
a) Allowed the states a free hand in regulating insurance, and
b) Shrunk the market by allowing 62 percent of the market to secure its coverage as employer-based “health benefits.”
The result is that only 6 percent of the non-elderly population actually buys insurance directly from insurance companies and these tend to be a perversely self-selected group who are too sick to work or can’t get a good job. As a result, the insurance companies can’t create large risk-pools and have to charge everybody a high rate.
Understanding all this requires a little analysis, of which Democrats seem to be incapable, and so the easiest thing is to blame it on “greed.” Thou and I are certainly not greedy, nor are our favorite politicians greedy, but someone out there is greedy — the insurance companies! — and therefore their greed must be countered by the government, mainly by getting the government into the insurance business.
I take my text from a 95-page report “Premiums Soaring in Consolidated Health Insurance Market — Lack of Competition Hurts Rural State, Small Business,” issued last May by Health Care For America Now!, a Washington lobbying organization sponsored by the AFL-CIO, Move On, the AFSCME, the teachers’ unions, the Children’s Defense Fund, La Raza, ACORN and a lot of other groups, the names of which are probably familiar.
The report described an alarming situation:
Commercial health insurance premiums have risen four times faster than wages and have more than doubled in the last nine years. Shrinking competition among health insurance companies is a major cause of these spiraling costs. In the past 13 years more than 400 corporate mergers have involved health insurers, and a small number of companies now dominate local markets.
In 21 states, the top two insurance vendors control more than 70 percent of the market, while in nine states that portion has been captured by a single provider. In Alabama, for instance, Blue Cross/Blue Shield controls 83 percent of the market. In Rhode Island, Blue Cross/Blue Shield and UnitedHealth together own 95 percent. As the report notes, “The U.S. Justice Department considers a market ‘highly concentrated’ if one company holds more than a 42 percent share of that market, a level that is common in…more than 30…states.”
Americans are paying for this unchecked private insurance industry consolidation in the form of higher health premiums and a growing number of uninsured people. Meanwhile, insurance company profits and compensation for the industry’s top executives are surging…
The report quotes David Balto, former policy director of the Bureau of Competition at the Federal Trade Commission and now a fellow at the Center for American Progress:
Antitrust enforcement against anti-competitive mergers and exclusionary conduct is essential to a competitive marketplace. This unprecedented level of concentration and the lack of antitrust enforcement pose serious policy and health care concerns.
Then it turns to President Barack Obama for a summary:
“The consequence of lax [antitrust] enforcement for consumers is clear,” then-Senator Barack Obama said is a September 2007 address to the American Antitrust Institute. “The number of insurers has fallen by just under 20 percent since 2000. These changes were supposed to make the industry more efficient, but instead premiums have skyrocketed.” [brackets in original]
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
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The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
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