Health insurance not a free market

If a public option brings health costs down, then why don’t we have a national auto insurance public option? Why not a public option grocery store? Or a public option computer company to keep Microsoft on its toes?

The way to hold insurance companies accountable is to deregulate (allow interstate sales of health insurance and legalize bare bones policies), not provide a socialist option to compete with them. The free market threat of going under, can hold insurance companies accountable.

Insurance companies currently are protected by government from out-of-state competition. So they’re an oligopoly (not a monopoly, but only a few sellers). Mandates keep out the little guy. Bare bones policies are regulated out of existence. In this way, the current health insurance market is not a free market. So why, then, do we need a government plan to compete with the highly regulated oligopoly that already exists? End the regs and end the oligopoly. No government plan needed.

The solution is deregulation, which includes ending subsidies and other government-allowed protections to the health insurance industry. Repeal ERISA and the tax code sections that subsidize the industry. Deregulate to end the cozy corporatism that now exists. That’s the 21st century way to go. The Medicaid/public option model is a 1960’s idea.

Public options are not the right way to bring down costs in any field. Economics 101 should teach us that. Government-run enterprises don’t feel the spur of competition, and the pain of going out of business. Governments just raise taxes and print and borrow more money.

Ultimately, there’s nothing to hold down costs in government programs because of this, yet in the private sector there is. That’s why the private sector is always better than the government in providing services; it feels the sharp spur of competition.

Most start up businesses fail. Most government programs last forever. Governments don’t feel the incentive to compete and get better and cheaper, or fail. Thus, government-run programs always run over budget, don’t make money, and require subsidies to stay afloat. This is the historical case with Medicare (in debt and underpaying doctors and hospitals), Medicaid, the Post Office (stamp prices rising faster than regular inflation), Amtrak and Massachusetts Care (which is spending $595 million more than anticipated, funded by an obscene $1 per pack regressive tax on cigarettes).

Governments don’t run anything well. And the VA is a poor model to follow. War vets are being neglected. Socialism doesn’t work, and it usually means privacy invasions and dehumanization (just take a number). And when government increases payments in any field, prices skyrocket. With federal student loans for college, tuition inflation has far outstripped regular inflation. Same with health care.

Take the booming private cosmetic surgery market for breast enhancements, botoxes, hair transplants and lasik eye surgeries. The prices in these parts of health care have plummeted because there’s competition, and insurance isn’t paying. Patients pay directly, so there’s price consciousness and shopping. This puts downward pressure on prices, something that doesn’t occur in regular health care.

We need a freer health insurance market that is more retail-oriented, competes across state lines, and is allowed to sell bare bones/catastrophic/high deductible coverage so that insurance goes back to its core purpose: protection from catastrophic or highly unexpected events, not as an overall system of prepaid health care.

Government can’t count votes, yet we’ll hand health care to it?

Jeff E. Jared is a Kirkland resident and attorney.

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