Policy driven economy #4

Health care, oh how I’ve already written much about it.   Pooling is theft.  That much ought to be obvious.  Government health care spending accounts for almost 50% of all health care spending, which gives in close to monopsonist power:

A market dominated by a single buyer. A monopsonist has the MARKET POWER to set the PRICE  of whatever it is buying (from raw materials to LABOUR). Under PERFECT COMPETITION, by contrast, no individual buyer is big enough to affect the market price of anything.

And, that percentage is only going to go one direction, up.  Medicare will, if isn’t already doing so, bust the budget.  ObamaCare (can we maybe call it ObamaCare-Less?) without total repeal, will within a few years render any private spending insignificant to non-existent.

One must understand the history of health insurance, especially employer provided health insurance.

It dates to WW2 when wage and price controls placed on a shortage of manpower (war!!)  made it impossible for the market to regulate.  Thus, new forms of compensation had to created and employer provided health insurance arrived.  Later, in the 1970’s, President Nixon imposed wage and price controls which again, distorted the markets.  Again, health insurance became a premium form of payment.  And thus, the market for health care became forever distorted and skewed.

What was once, and ought to be, is that health care is simply an exchange of money for goods and services, like everything else.  But what happened was the consumer and the purchaser no longer were one.  Worse, there grew a hostility between producers and consumers.

Austrians know that markets are peaceful, prosperous, and mutually beneficial and cooperative.  It is precisely why, as Jeffrey Tucker has written, that both customer and sales person say “thank you” after the transaction as both sides are made better off.  But health “insurance” pits doctors against customers against insurance companies.

So, policy was set to not tax health premiums, to allow tax deductions for premiums, etc.  This was to help direct people into insurance plans in a market driven manner.  And even ObamaCare was sold on the idea of more competition in markets.  Yeah, right.

Here’s the latest broken window:

Major health insurers to stop offering new child-only policies

Some of the country’s most prominent health insurance companies have decided to stop offering new child-only plans, rather than comply with rules in the new health-care law that will require such plans to start accepting children with preexisting medical conditions after Sept. 23.

Three insurers – WellPoint, Cigna and CoventryOne – all cited uncertainty in the health insurance market for their decisions. That incertitude and the resulting decision of other insurers to drop their child-only plans, according to WellPoint spokeswoman Kristin Binns, “has created an unlevel competitive environment.”

CoventryOne spokesman Matthew D. Eyles said that the insurer was facing “unique challenges that could undermine our ability to offer value and meet our continued obligations to existing policyholders.”

With no such mandate currently in place, however, the result over the next several years could be that the pool of children insured by child-only plans would rapidly skew toward those with expensive medical bills, either bankrupting the plans or forcing insurers to make up their losses by substantially increasing premiums for all customers. And Zirkelbach said the effect could be compounded if only a few plans remain in the market.

This is the direct result of government intervention, i.e. policy, in the health care market.  We know for a fact that Medicare underpays and more and more doctors are refusing to take Medicare patients.  To make for this, doctors must charge their private patients more via their insurance companies.  That is the power of monopsony.

We need only see this as again another abject failure of policy driven economy.  When policy distorts markets, drives them in directions other than their natural path, the results are destruction.

With health care, though, I often wonder if that wasn’t the plan all along.


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