Health insurance nationalization - here we come
When the history
of the United States is written the date Monday, October 26, 2009
will be one which those seeking to trace the growth and intrusiveness
of the Federal government will note for marking the start of the
nationalization of the American health care system. The date is
important because on that day Senate Majority Leader Harry Reid
announced that he was introducing the so-called “public option”
into the Senate's version of President Obama's horribly mis-named
“health care reform” bill. According to Senator Reid his version
of the public option will allow individual states to “opt-out” of
participation in the plan. Details of the opt-out provision have not
been finalized but, given the Federal government's propensity to
withhold funds from states which fail to act in the manner that our
Grand Masters desire, it is likely that funds for some other portion
of the reform plan will be withheld so as to encourage states to do
the right thing. In the long term it likely won't matter as private
health insurers will succumb to the competition from the
government-subsidized health insurance plan.
We are told that
the “public option” will act to increase competition between
private insurance providers. This assumes that competition in
providing private health insurance is somehow lacking. Those who
maintain that this is so often point to the similarity in prices
offered for similar insurance coverage. This is a fundamental error
in defining competition and, like so many other fundamental errors
that the parasitic class makes, this one is going to end up costing a
lot of money. The error which is being made is the confusion of
similarity of the prices quoted for the same sort of coverage from
different companies with a lack of competition. It is the same thing
as asserting that there is no competition between WalMart and Target
based on the fact that the prices of the vacuum cleaners they sell
are close to each other. For example, I checked the insurance quotes
for health coverage for two adults, both non-smokers, with no
resident children. The policies I looked at had $5000 deductibles,
20% coinsurance rates, and $30 office visits, along with allowing me
to keep my current doctor. The prices I got back ranged from a low
of $280.55 to $303 per month – not a significant differential in
price, but there were ten companies included in that spread, plenty
of competition from where I sit. And there shouldn't be much of a
difference in price for the simple reason that health insurance
pricing is based on statistical expectations of health outcomes
across a broad spectrum of the insured. A large disparity in price
would be indicative of either substantially different internal costs
or important divergences of coverage – the “fine print.” The
fact that I was able to obtain quotes on roughly one hundred
disparate policies, issued by more than ten companies, tells me that
competition for my health care dollar is alive and well. The lack of
a wide price spread for similar coverage is also an indication that
the companies involved have roughly the same costs of doing business
– costs undoubtedly increased by governmental interference in what
is left of what was once a free market.
Unfortunately,
the level of economic education in this country is such that most
people are not capable of seeing through the fog of the statist
propaganda that is being disseminated about the “public option.”
This makes them susceptible to the argument that introducing a
government run (and subsidized) health care insurer will increase
competition and result in lower insurance prices. The sad fact is
that a government-subsidized health plan will be less expensive, for
the insured person, than will similar coverage from a private company
– the politicians will see to that. The Federal government will
simply subsidize the public option to whatever extent is necessary –
raising taxes and hiding the costs as needed – because to do
otherwise would be to expose the lies about how the public option
will actually work.
As time goes on
the subsidized nature of the public option insurance will ensure that
it will gradually drive private insurers out of the market. Besides
the subsidies offered the purchasers of public option insurance, the
Federal government is sure to impose further regulatory burdens upon
private companies – regulations that the government itself will be
exempted from. The added costs of the regulations will act to force
private companies to raise their prices in order to remain
profitable. The Federal government is also sure to impose new
minimum requirements for health insurance policies regarding the type
of coverage they must meet – minimums the public option insurance
will either be exempted from or which taxpayers will find themselves
footing the bill for. This sort of action on the part of the
Federal government will act to drive non-state actors from the health
insurance stage.
Even if some
states do opt-out of the public option there will come a time at
which it will no longer matter. Sooner or later the market for
private health insurance will shrink to the point at which it will
not be sustainable. For private insurance to be viable the market
for the product needs to be large enough that affordable policies can
cover the cost of the occasional catastrophic illness on the part of
some of the insured. I don't pretend to know how large that market
need be but it is likely to be bigger than the populations of states
that might choose to opt-out; states such as Wyoming, Montana, and
Arizona – to name some of the states that sometimes show signs of
resisting Leviathan's continued growth. In any case, at some point
in the future there will no longer be private health insurers and the
nationalization of yet another piece of the United States' economy
will be complete. And it will all have started on October 26, 2009.