Ron Morley's Freedom Blog

This is the place where I do my little bit to explain the evils of the State.

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.


Anonymous said:

I hope everything will fall into places soon.

# October 28, 2009 1:45 AM